For SBA lenders
Short answer
For loans over $50,000, the SBA requires the lender to take an available lien on all business assets. If business assets are insufficient, the lender must take available equity in personal real estate (up to 150% of the loan amount), subject to certain exceptions.
The SBA does not decline a loan solely for lack of collateral; however, lenders are expected to take all available collateral. For loans exceeding $50,000, a lien on all fixed assets and current assets of the business is mandatory. If a collateral shortfall exists after securing business assets, available equity in personal real estate of any principal with 20% or more ownership must be taken, up to the amount of the collateral shortfall, but not exceeding 150% of the loan amount.
A $500,000 loan has $300,000 in business asset value. The $200,000 shortfall means the lender must take a lien on personal real estate from any 20%+ owner, up to $200,000 of available equity, provided the total lien doesn't exceed 150% of the loan ($750,000).
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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.
More on collateral & lien requirements
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