# What collateral does an SBA loan to buy a business require?

**Short answer:** The loan must meet Appendix 15's fully secured test at discounted values, and the lender must take receivables and inventory. A shortfall brings in available equity in personal real estate. Source: SOP 50 10 8.1, App. 15, Para. C.3.d.

Canonical page: https://www.sbaexpress.loans/answers/what-collateral-secures-an-sba-loan-to-buy-a-business/
Last checked: 2026-11-08

The lender must take liens on available fixed assets up to the loan amount, at discounted values, plus receivables and inventory. SOP 50 10 8.1, App. 15, Para. C.3.d, sets these limits:

- **Used or existing machinery and equipment:** 50% of Net Book Value, or 80% with an Orderly Liquidation Appraisal, minus prior liens.
- **Improved real estate:** up to 85% of market value. Unimproved real estate counts at 50%.
- **Furniture and fixtures:** up to 10% of Net Book Value or appraised value.
- **Receivables and inventory:** the lender must take them, and no more than 10% of current book value counts.

Goodwill is not a fixed asset, so a price that is mostly goodwill can leave a shortfall.

## When there is a shortfall

The lender must take available equity in solely owned personal real estate. That reaches co-borrowers, owners of 20% or more, and guarantors other than Supplemental Guarantors. It includes residential and investment property, and other commercial real estate (App. 15, Para. C.3.d).

Liens may be limited to the collateral shortfall or 150% of the equity in the property. No lien is required when equity is less than 25% of fair market value.

## Smaller loans

A 7(a) Small or SBA Express loan used for a purchase must meet the same fully secured definition. The lender need not include other commercial real estate held by the borrower or guarantors (Sec. B, Ch. 2, Para. A.2).

## Other assets

All assets conveyed in the sale must be properly secured, including transferable licenses such as a liquor license. Vehicles follow the $20,000 and existing-lien exception (App. 15, Para. A).

## Sources

- [SOP 50 10 8.1, App. 15, Para. C.3.d (Para. C begins p. 371)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. A (p. 362)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. B, Ch. 2, Para. A.2 (Para. A begins p. 125)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)