For SBA lenders
Short answer
Lenders must obtain current and reliable valuations for all collateral, utilizing qualified appraisers or other appropriate methods, to determine fair market value for disposition.
During liquidation, the SBA requires lenders to take prudent steps to maximize recovery from collateral. This includes obtaining current valuations (e.g., appraisals, broker price opinions, equipment valuations) that accurately reflect the collateral's market value, ensuring that any disposition is commercially reasonable.
For a defaulted $800,000 7(a) loan secured by real estate and equipment, the lender obtains a current MAI appraisal for the real estate and a certified equipment appraisal. These valuations inform the lender's decision on how to best market and sell the assets.
Insider move
The lender must ensure collateral valuations are independent, recent, and from qualified sources. Under-valuing collateral or failing to obtain proper valuations can lead to a repair or denial of the guaranty purchase request, as it indicates a failure to maximize recovery.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 57 - 7(a) Loan Servicing and Liquidation
Universal Purchase Package (UPP)
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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