For SBA lenders
Short answer
If business assets are insufficient, the lender must take available personal assets of the guarantors, such as real estate or marketable securities, to mitigate the collateral shortfall as much as possible.
The SBA requires the lender to take all available business assets up to the loan amount. If a collateral shortfall remains, the lender must pursue available equity in personal real estate (e.g., primary residence, investment properties) and other marketable personal assets from all guarantors, ensuring prudent lending standards are met.
A $700,000 SBA loan is needed, but the business assets are only valued at $400,000. The lender identifies a guarantor with a personal residence having $200,000 in available equity and another with marketable securities worth $75,000. These would be taken as additional collateral to cover the shortfall.
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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