For SBA lenders
Short answer
A lender may generally not waive a lien on readily marketable personal assets from a guarantor unless the 7(a) loan is fully secured by other business or personal assets, and the cost of taking and perfecting the lien outweighs the benefit. This is a rare exception and requires strong justification.
SBA requires lenders to collateralize 7(a) loans to the maximum extent possible, including taking available equity in personal real estate (first or second lien) and readily marketable personal assets. Waiving a lien on readily marketable personal assets is only permissible if the loan is already fully secured by other means, or if the administrative burden outweighs the negligible recovery potential, and this decision must be thoroughly documented.
A $1 million 7(a) loan is fully secured by business real estate valued at $1.5 million. One guarantor has a boat valued at $20,000, but the cost to perfect a lien on it is $2,500. The lender, having already fully secured the loan, may decide to waive the lien on the boat, documenting that the cost/benefit does not justify taking it.
Insider move
Lenders must document compelling reasons for waiving any available collateral. Failure to take required readily marketable collateral, especially when the loan is not otherwise fully secured, can lead to a repair or denial of the SBA guaranty if the loan defaults.
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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