Glossary · Doing the deal
In short
When the business's assets are worth less than the loan. Allowed on 7(a) loans — the lender may take a lien on other assets you own.
Most small businesses don't have enough tangible assets to fully secure the loan amount — the value is in the goodwill, which can't be sold separately. The SBA allows this collateral shortfall, but the lender may take a lien on other assets you personally own, including your home. This is different from the personal guarantee — it's a specific lien on property, not just a promise to pay. Ask your lender early what additional collateral they'll require so there are no surprises at closing.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-14. 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 2026-06-14 · 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.
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