Glossary · Reading the business
In short
This is the gap that exists when the liquidation value of the business assets used as collateral is less than the loan amount. It’s the opposite of being fully collateralized.
A collateral deficiency requires the lender to document why the loan is still a sound credit. You'll need to demonstrate strong cash flow and management experience to offset this. The SBA looks at repayment capacity first, but a significant deficiency can still raise questions.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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