SBA loan basics
Short answer
Collateral is an asset, like real estate or equipment, that a borrower pledges to a lender to secure a loan. Banks require it to reduce their financial risk in case the borrower cannot repay the loan.
While the SBA offers a guaranty, lenders are still required to take all available business and personal collateral up to the loan amount. This ensures that the borrower has a vested interest and that there are assets to recover in the event of default, supplementing the SBA's guaranty.
A business owner taking out a $750,000 loan to buy a manufacturing plant might pledge the plant itself, existing machinery, and accounts receivable as collateral. If they also own a personal unencumbered investment property, that might also be taken.
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
Standard 7(a) Authorization File Library
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. 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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