Glossary · Doing the deal
In short
This means another lender has a claim on the collateral that is subordinate to the first lien holder. If the business defaults, the second lien holder gets paid only after the first lien is satisfied.
The SBA 7(a) loan typically requires a First lien on business assets. If there's a Seller note or other financing, it might take a Second lien position. Understand the implications for your Collateral and ensure the SBA loan's priority, as this affects who gets paid first if things go south.
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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