SBA 7(a) Q&A
Short answer
Potentially, but significant prior tax liens on business assets are a major hurdle for an SBA 7(a) loan and usually require resolution before closing.
The SBA requires the lender to obtain the best available lien position, typically a first lien, on all business assets. Significant prior tax liens (federal, state, or local) would prevent the lender from securing this position. These liens usually need to be paid off or properly subordinated to the SBA loan before approval.
A buyer wants to acquire a business with $75,000 in federal tax liens on its equipment. The lender would require these liens to be paid off at closing from the seller's proceeds, or legally subordinated, before they can fund the SBA loan and secure their first lien position.
Insider move
Lenders perform thorough lien searches to identify all existing encumbrances. They cannot proceed with funding if superior liens, especially tax liens, are present and not resolved, as this jeopardizes their collateral position and the SBA guaranty.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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