Does an SBA lender have to take a lien on my vehicles?
Short answer
Not if the vehicle already has a lien or is worth $20,000 or less when the SBA loan number is assigned. Source: SOP 50 10 8.1, App. 19, Para. A.1, Vehicles.
Not always. SOP 50 10 8.1, App. 19, Para. A.1, Vehicles, says a lender is not required to take a lien on a vehicle in two cases:
- The vehicle already has a lien.
- The vehicle's value does not exceed $20,000 when the SBA loan number is assigned.
A vehicle above that value with no existing lien falls outside the exception, so expect a lien where the loan's collateralProperty a lender can take and sell if a loan is not repaid. rules reach it. A program-specific rule can change the result.
How value is shown
The lender may support value with an independent third-party source. The SOP names three:
- An orderly liquidation value from an appraisal
- An independent vehicle valuation company or website
- The purchase price allocated to the vehicle, when loan proceeds buy it
The lender must record in its credit memorandum whether the vehicle was already encumbered. If value is the reason for no lien, it must record the valuation source and amount.
How other rules treat vehicles
On a 7(a) Small loan above $50,000, the first lien requirement on financed assets carves out these vehicles (App. 19, Para. B.2). Loans to buy a business apply the same $20,000 and existing-lien test (App. 15, Para. C.3.d).
On Standard 7(a) loans, SBA's definition of fixed assets sends vehicles to this rule (App. 19, Para. B.1). A lender can still take a lien below these limits if its policy calls for it.
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