{"ok":true,"canonical_url":"https://dealroom.so/glossary/subordination-of-lien","api_url":"https://dealroom.so/api/public/glossary/subordination-of-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":"subordination-of-lien","term":"Subordination of Lien","group":"The loan itself","definition":"This is an agreement where one creditor (like a seller) agrees their claim on collateral is secondary to another creditor (like the SBA lender). It ensures the SBA lender gets paid first.","what_it_means":"If there's existing debt on the business or specific assets, or if you're using a seller note, the SBA lender will require a \"subordination of lien\" from those other creditors. This guarantees the SBA loan has \"first lien position\" on critical collateral, as required by SBA rules. Always confirm that all existing liens will be properly subordinated or paid off at closing.","url":"https://dealroom.so/glossary/subordination-of-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":"lien-position","term":"Lien position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","term":"First lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"security-agreement","term":"Security Agreement","url":"https://dealroom.so/glossary/security-agreement"}],"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":"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":"Is a separate lien required on each piece of equipment if a blanket lien is already in place?","url":"https://dealroom.so/sba-7a/questions/is-a-separate-lien-required-on-each-piece-of-equipment-if-a-blanket-lien-is-already-in-pla"},{"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"}]},"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 — Subordination of Lien","url":"https://dealroom.so/glossary/subordination-of-lien","source_type":"DealRoom Data"}}