Glossary · Reading the business
In short
Describes an asset that is free of any liens, mortgages, or other legal claims by creditors. For an SBA loan, collateral must typically be unencumbered to be valuable to the lender.
When the SBA considers assets like real estate, equipment, or marketable securities as collateral, they must be unencumbered. This means no other lender has a prior claim on them. If an asset has an existing lien, it can't fully secure the SBA loan, potentially leading to a collateral shortfall.
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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