Glossary · Doing the deal
In short
An encumbrance is a claim or liability against an asset, like a lien or a mortgage, that restricts its transferability or use. It means someone else has a right to that asset.
During an acquisition, your lender will perform lien searches to identify any existing encumbrances on the business's assets. All encumbrances must be cleared at closing to give your lender a first lien position on the collateral for your SBA loan. This ensures a clean transfer of assets.
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.
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