SBA 7(a) Q&A
Short answer
Yes, valuable intellectual property (IP) like patents or trademarks can serve as collateral, but requires a specialized independent appraisal and proper legal perfection of the lien.
While less common than tangible assets, IP can be used as collateral if it has a discernible market value and is essential to the business's operations. An independent, qualified appraisal is mandatory, and the lender must perfect its security interest according to UCC filings and potentially through the USPTO.
A software company with a proprietary algorithm protected by a patent seeks a $1,000,000 loan. An independent appraiser values the patent at $700,000. This patent, along with other business assets, secures the loan.
Insider move
Lenders are cautious with IP collateral due to valuation complexities, potential infringement risks, and challenges in liquidation. They require expert appraisals and meticulous legal work to perfect the lien and protect its value.
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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