{"ok":true,"canonical_url":"https://dealroom.so/glossary/substitution-of-collateral","api_url":"https://dealroom.so/api/public/glossary/substitution-of-collateral","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":"substitution-of-collateral","term":"Substitution of Collateral","group":"Doing the deal","definition":"The act of replacing one piece of collateral pledged for a loan with another of equal or greater value, subject to lender and SBA approval.","what_it_means":"If you later sell an asset that was pledged as 'collateral' for your SBA loan, you'll need the lender's and SBA's permission to substitute it with a new asset. The new collateral must meet their requirements for value and lien position, and this process is not automatic.","url":"https://dealroom.so/glossary/substitution-of-collateral","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":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","term":"Lien","url":"https://dealroom.so/glossary/lien"},{"slug":"security-interest","term":"Security Interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"liquidation-value","term":"Liquidation Value","url":"https://dealroom.so/glossary/liquidation-value"}],"related_questions":[{"question":"Can a 7(a) lender approve the substitution of significant collateral without prior SBA approval?","url":"https://dealroom.so/for-lenders/questions/can-a-7-a-lender-approve-the-substitution-of-significant-collateral-without-prior-sba-appr"},{"question":"Can a lender approve a collateral substitution without prior SBA approval during 7(a) loan servicing?","url":"https://dealroom.so/for-lenders/questions/can-a-lender-approve-a-collateral-substitution-without-prior-sba-approval-during-7-a-loan-"},{"question":"When does a lender require prior SBA approval for a voluntary collateral substitution on a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-does-a-lender-require-prior-sba-approval-for-a-voluntary-collateral-substitution-on-a"},{"question":"What specific collateral must be taken when a 7(a) loan is under-collateralized by business assets, even with a blanket lien?","url":"https://dealroom.so/for-lenders/questions/what-specific-collateral-must-be-taken-when-a-7-a-loan-is-under-collateralized-by-business"},{"question":"How does a collateral assignment of life insurance protect a lender?","url":"https://dealroom.so/sba-7a/questions/how-does-a-collateral-assignment-of-life-insurance-protect-a-lender"},{"question":"What does 'collateral' mean in the context of an SBA loan?","url":"https://dealroom.so/sba-loans/basics/what-does-collateral-mean-in-the-context-of-an-sba-loan"}]},"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 — Substitution of Collateral","url":"https://dealroom.so/glossary/substitution-of-collateral","source_type":"DealRoom Data"}}