For SBA lenders
Short answer
Lenders must provide detailed documentation and invoices for all liquidation expenses, demonstrating they were reasonable, necessary, and incurred in a commercially reasonable manner.
When submitting a UPP, lenders must include an itemized breakdown of all liquidation expenses, accompanied by supporting invoices, receipts, and evidence that the expenses were reasonable and necessary for the orderly liquidation of collateral. The SBA reviews these expenses for compliance with prudent liquidation standards and will disallow any deemed excessive or unsupported.
A lender incurred $15,000 in legal fees, $5,000 for an auctioneer, and $2,000 for property preservation during the liquidation of a defaulted 7(a) loan. The UPP includes detailed invoices from the law firm, the auction house, and the property management company, showing the services rendered and the costs.
Insider move
Lenders must carefully track and document all liquidation expenses. Failure to provide adequate justification or if expenses are deemed imprudent or excessive by the SBA, can result in those expenses being disallowed from the guaranty purchase.
Universal Purchase Package (UPP)
SOP 50 57 - 7(a) Loan Servicing and Liquidation
Request to Honor SBA 7(a) Loan Guaranty
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 liquidation
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day