For SBA lenders
Short answer
Lenders must take all available collateral, business and personal, up to loan's exposure, when the business assets do not fully secure the loan. Personal real estate is taken when available and equity exists.
The SBA requires that all available collateral be taken to secure 7(a) loans, up to the point where it fully secures the loan. If business assets are insufficient, a lien on available personal real estate (e.g., primary residence, investment property) of a principal with 20% or more ownership is required if equity is present and it doesn't create an undue burden.
A $600,000 7(a) loan has business assets valued at $300,000. The 100% owner has a primary residence with $200,000 in equity and an investment property with $150,000 in equity. The lender would take a lien on both personal real estate properties to supplement collateral.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Standard 7(a) Authorization File Library
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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