For SBA lenders
Short answer
An intercreditor agreement is required when there are multiple secured creditors with liens on the same collateral, especially if a junior lien position is allowed for the SBA lender or if proceeds from collateral sales need clear distribution rules.
If the SBA lender cannot obtain a first lien on all available business assets or if there's existing debt secured by the same collateral, an intercreditor agreement defines the lien priority, rights, and responsibilities of each secured party. This is crucial for managing risk and ensuring orderly liquidation in case of default.
A borrower has an existing line of credit with Bank A, secured by accounts receivable and inventory. A 7(a) loan from Bank B is approved, also requiring a lien on AR and inventory. An intercreditor agreement is necessary between Bank A and Bank B to specify which bank has priority for each asset class or how proceeds from sales will be distributed.
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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