Glossary · The loan itself
In short
A second lien on collateral that the SBA loan uses as primary security, which is generally not allowed. The SBA loan must be in the first lien position on all significant collateral to protect its interest.
The SBA requires its loan to have a first lien position on all major business assets and any real estate collateral. A "prohibited junior lien" means another lender has a subordinate claim on the same assets, which is typically forbidden as it compromises the SBA's recovery rights in a default. Ensure no existing or new debt will create such a lien.
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 2026-06-15. 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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