For SBA lenders
Short answer
Personal real estate is required as additional collateral when there is a collateral shortfall after securing all available business assets and the equity in the real estate is not exempt.
The SBA requires lenders to take all available collateral, up to the loan amount, to mitigate risk. If the business assets (inventory, equipment, accounts receivable, real estate) do not fully secure the loan, personal real estate may be required as additional collateral. However, a borrower's primary residence is generally exempt if its equity is below a certain threshold or if it is the only available collateral and the loan amount is relatively small.
A $600,000 loan to a service business has only $250,000 in available business assets. If the borrower owns a primary residence with significant unencumbered equity, the lender may be required to take a lien on it to cover the $350,000 collateral 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.
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