{"ok":true,"canonical_url":"https://dealroom.so/glossary/lien-subordination","api_url":"https://dealroom.so/api/public/glossary/lien-subordination","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"lien-subordination","term":"Lien subordination","group":"Doing the deal","definition":"Lien subordination is an agreement where a lienholder agrees to place their claim on an asset behind another lienholder's claim. This changes the payment priority if the asset is sold.","what_it_means":"In an SBA deal, if the seller is providing a seller note, the SBA lender will require the seller's lien on the business assets to be subordinated to the SBA loan's lien. This means the SBA lender gets paid first from those assets if the business defaults, which is critical for securing the 7(a) financing.","url":"https://dealroom.so/glossary/lien-subordination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","term":"Lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","term":"First lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"second-lien","term":"Second lien","url":"https://dealroom.so/glossary/second-lien"},{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"}],"related_questions":[{"question":"What are the lien subordination requirements for a seller note on full standby in a 7(a) acquisition?","url":"https://dealroom.so/for-lenders/questions/what-are-the-lien-subordination-requirements-for-a-seller-note-on-full-standby-in-a-7-a-ac"},{"question":"When is a lender required to obtain a subordination agreement for existing business debt?","url":"https://dealroom.so/for-lenders/questions/when-is-a-lender-required-to-obtain-a-subordination-agreement-for-existing-business-debt"},{"question":"What specific language is required in a seller note subordination agreement for SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/what-specific-language-is-required-in-a-seller-note-subordination-agreement-for-sba-7-a-lo"},{"question":"If I use a seller note as part of my equity, what are the specific subordination terms required?","url":"https://dealroom.so/sba-7a/questions/if-i-use-a-seller-note-as-part-of-my-equity-what-are-the-specific-subordination-terms-requ"},{"question":"What documentation is specifically required for a lender to demonstrate proper subordination of a seller note on full standby?","url":"https://dealroom.so/for-lenders/questions/what-documentation-is-specifically-required-for-a-lender-to-demonstrate-proper-subordinati"},{"question":"What specific language is required in a seller note's subordination agreement to ensure it counts as full standby equity?","url":"https://dealroom.so/for-lenders/questions/what-specific-language-is-required-in-a-seller-note-s-subordination-agreement-to-ensure-it"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Lien subordination","url":"https://dealroom.so/glossary/lien-subordination","source_type":"DealRoom Data"}}