{"ok":true,"canonical_url":"https://dealroom.so/glossary/prohibited-junior-lien","api_url":"https://dealroom.so/api/public/glossary/prohibited-junior-lien","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":"prohibited-junior-lien","term":"Prohibited Junior Lien","group":"The loan itself","definition":"A second lien on collateral that the SBA loan uses as primary security, which is generally not allowed. The SBA loan must be in the first lien position on all significant collateral to protect its interest.","what_it_means":"The SBA requires its loan to have a first lien position on all major business assets and any real estate collateral. A \"prohibited junior lien\" means another lender has a subordinate claim on the same assets, which is typically forbidden as it compromises the SBA's recovery rights in a default. Ensure no existing or new debt will create such a lien.","url":"https://dealroom.so/glossary/prohibited-junior-lien","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"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"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":"lien-position","term":"Lien position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"}],"related_questions":[{"question":"What are the specific lien priority requirements for lenders on both business and personal collateral securing a 7(a) loan, particularly when junior liens exist?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-lien-priority-requirements-for-lenders-on-both-business-and-personal"},{"question":"Can a lender accept a junior lien position on non-real estate business assets as collateral for an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-lender-accept-a-junior-lien-position-on-non-real-estate-business-assets-as-collatera"},{"question":"What specific types of businesses are prohibited from getting an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-specific-types-of-businesses-are-prohibited-from-getting-an-sba-7-a-loan"},{"question":"Are there any specific business industries that are generally prohibited from getting an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/are-there-any-specific-business-industries-that-are-generally-prohibited-from-getting-an-s"},{"question":"If a seller note is on standby, is the seller prohibited from any post-sale employment with the business?","url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-standby-is-the-seller-prohibited-from-any-post-sale-employment-with"},{"question":"What are the specific requirements for a lender to obtain a valid first lien position on UCC collateral when prior liens exist?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-a-lender-to-obtain-a-valid-first-lien-position-on-u"}]},"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 — Prohibited Junior Lien","url":"https://dealroom.so/glossary/prohibited-junior-lien","source_type":"DealRoom Data"}}