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Home / Answers / Collateral / What is piggyback financing, and can an SBA loan be part of it?

What is piggyback financing, and can an SBA loan be part of it?

Janover Capital editorial team · Checked November 8, 2026

Short answer

Piggyback financing pairs loans for the same purpose, with the SBA loan in a junior or no lien position on the other loan's collateral. A 7(a) loan must not use it. Source: SOP 50 10 8.1, App. 19, Para. A.1.

Piggyback financing is a stacked loan structure that SBA bars for 7(a) loans. SOP 50 10 8.1, App. 19, Para. A.1, Adequacy of collateralProperty a lender can take and sell if a loan is not repaid. , says a lender must not have a 7(a) loan in a piggyback structure.

The SOP's test has three parts:

Loans approved within 90 days of one another count as made at or about the same time.

A simple example

A bank makes a conventional first mortgage to buy a building. A 7(a) loan for the same purchase then takes a second lien on that building, within 90 days. That fits the test.

Structures that are not piggyback

Why SBA bars it

The rule sits next to the ban on preferences. A lender may not take action on an SBA-guaranteed loan that establishes a preference in its own favor (App. 19, Para. A.1; 13 CFR § 120.411).

App. 15, Para. C.3.c, applies the same ban to loans that buy a business. The 504 program is different. A 504 loan usually takes a second lien by design, behind a third party lender (13 CFR § 120.934).

Sources

  1. SOP 50 10 8.1, App. 19, Para. A.1, Adequacy of collateral (Para. A begins p. 404)
  2. SOP 50 10 8.1, App. 15, Para. C.3.c (Para. C begins p. 371)
  3. 13 CFR § 120.411
  4. 13 CFR § 120.934

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