For SBA lenders
Short answer
Accounts receivable from government contracts can serve as collateral, but perfecting a security interest requires compliance with the Assignment of Claims Act, which involves specific notification to government agencies.
While government contract receivables are eligible collateral, standard UCC filings alone are insufficient for perfection. The Assignment of Claims Act (31 U.S.C. § 3727 and 41 U.S.C. § 6305) requires specific written notice to the government contracting officer, the disbursing officer, and potentially other agency heads. Failure to comply can result in an unperfected lien and a guaranty repair or denial.
A borrower applies for a 7(a) loan, offering accounts receivable from a federal government contract as collateral. The lender must not only file a UCC-1 but also send written notices of assignment to the relevant government contracting and disbursing officers to properly perfect its security interest.
Insider move
Lenders must be aware of the special requirements for collateralizing government receivables. Incorrect or incomplete perfection of liens on such assets could lead to a loss in the event of default and a repair to the SBA guaranty.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
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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