SBA 7(a) Q&A
Short answer
Intellectual property (IP) can serve as collateral for an SBA 7(a) loan, but lenders typically require additional tangible collateral due to IP valuation complexities.
While the SBA permits taking liens on intellectual property, valuing and perfecting liens on patents, trademarks, or copyrights can be complex. Lenders will typically require a professional valuation of the IP and may seek additional tangible collateral. The primary focus remains on the cash flow generated by the business utilizing the IP to repay the loan.
You are acquiring a software company for $1,500,000, where its proprietary software code (IP) is its main asset. While the lender will take a lien on the IP, they may also require personal collateral or a higher equity injection if there's insufficient other tangible business collateral.
Insider move
Lenders are concerned with the difficulty of valuing and liquidating IP in case of default. They prefer a diverse collateral pool and strong cash flow. They will ensure proper legal documentation to perfect a lien on the intellectual property.
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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