SBA 7(a) Q&A
Short answer
If the acquired business has minimal hard assets, the SBA requires the lender to take all available business assets as collateral, and may require additional collateral from the borrower, including personal real estate.
The SBA requires lenders to collateralize 7(a) loans to the maximum extent possible. If business assets are insufficient, the lender must take available equity in personal real estate (e.g., the borrower's home, if applicable and there's sufficient equity) as additional collateral, up to the point where the loan is fully secured or until all available collateral is pledged. The SBA does not decline a loan solely for lack of collateral if the business has strong cash flow.
You're acquiring a software development company for $1,000,000. It has only $50,000 in computers and office furniture. The lender will take a lien on these, plus all other business assets (accounts receivable, intellectual property). If you have $200,000 in unencumbered equity in your personal residence, the lender would likely take a second lien on your home to further secure the loan.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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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