Which funding products does this apply to?

SBA Loan, Asset-Based Lending. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Are the figures here quotes?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

Can I reuse this content?

Quote a paragraph with a link back. Do not republish whole articles.

Do you need collateral for an SBA loan?

You do not need enough collateral to cover the loan. You do need to pledge what you have, and for many borrowers that reaches the house.

By Find Me Funders research desk Updated 14 September 2026 1064 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

Do I need collateral for an SBA loan?

Not full coverage — SBA rules stop a lender from declining an otherwise creditworthy 7(a) loan solely because the collateral falls short. But the lender must take the collateral that is reasonably available up to the loan amount, which means a blanket lien on business assets and, where a shortfall exists, a lien on personal real estate with meaningful equity. Below a loan size set by the SBA, lenders may follow their own unsecured policy instead.

The two rules that govern this pull in opposite directions, and both are true at once.

A shortfall is not a decline reason.If the credit is otherwise sound, the lender cannot turn a 7(a) down solely because the collateral does not cover the loan. This is one of the genuine advantages of the guarantee.

Available collateral must still be taken.The lender is required to secure the loan to the extent it reasonably can, up to the loan amount.

Put together: you can be short and still approved, but you will pledge what you have.

What gets pledged

Business assets. A blanket lien covering equipment, inventory, receivables and intangibles, perfected by a UCC filing. Expect this on almost every loan.
Assets being financed. A mortgage on real estate bought with the loan; a lien on equipment bought with the loan.
Personal real estate. Where business assets leave a shortfall, SBA rules direct the lender to take a lien on personal real estate holding meaningful equity. There is a threshold below which equity is not considered worth taking; the current test is in the SOP.
Other assets. Investment property, and in some transactions assets connected to the seller.

Collateral is not valued at book. Lenders apply discounted values reflecting a liquidation, using percentages the SBA prescribes. A business with a lot of equipment on the balance sheet can still show a large shortfall, and this surprises people every time.

The shortfall calculation, worked

Illustrative only, with placeholder discount percentages rather than the SBA's current prescribed figures —a $750,000 loan to a business whose balance sheet shows $410,000 of equipment at cost less depreciation. Apply a 50% liquidation percentage and that equipment supports $205,000 of the loan. The shortfall is $545,000.

Now the house. It is worth $620,000 with a $395,000 first mortgage. Take 85% of value and subtract the mortgage: $527,000 − $395,000 = $132,000 of available equity. A lien on your home closes $132,000 of a $545,000 shortfall.

Put both together and the collateral covers about 45% of the loan. The loan is still approved, because a shortfall is not a decline reason.

That last arithmetic is the part worth sitting with. The lien on your home is not sized to protect the lender against most of its loss — in this example it covers less than a fifth of the debt. It is taken because the rules require available collateral to be taken, and because a home lien changes how a borrower behaves in a difficult year long before it changes recovery.

The small loan exception

Below a loan size set by the SBA, a lender may generally apply the collateral policy it uses for its own comparable non-SBA loans. In practice that can mean a lien on business assets and no home lien. The cutoff changes; ask the lender where it currently sits and whether your request falls under it.

Collateral is not the same as a guarantee

Owners above the SBA's ownership threshold give an unlimited personal guarantee regardless of what is pledged. Being asked for both a guarantee and a lien on your home is normal, not double-counting. The guarantee is a promise to pay; the lien is a claim on a specific asset.

The situations that complicate the home lien

A spouse who is not an owner.Where the property is jointly held, the non-owner spouse is generally asked to sign the mortgage or deed of trust so the lien attaches to the whole property, without becoming a guarantor of the debt. Those are two different signatures with two different consequences, and it is worth asking the lender which one is being requested.

Little or no equity.Below the equity threshold the SOP sets, the lender is not required to take the lien. If your mortgage balance is close to the value, say so early with a recent valuation, because the calculation may make the question moot.

You rent, or own nothing.Then there is nothing available to take, and the shortfall simply stays a shortfall. Having no real estate does not disqualify you.

Property in a trust or an entity.Common in estate planning and it does not put the property out of reach, but it adds documents, a trustee's consent and often a title question. Raise it at term sheet stage rather than three days before closing.

Investment property.Frequently treated as available before a primary residence is reached, so list what you hold rather than waiting to be asked.

Getting collateral back later

Liens do not release themselves. Ask, before signing, what the lender's process is for releasing a specific parcel once the balance amortizes below a stated level, whether a partial release is available if you sell an asset, and who files the termination when the loan is repaid. Get the answer written into the loan agreement or the commitment letter. An emailed assurance from a relationship manager who has moved on is worth very little three years later, and an un-terminated lien is a real obstacle the next time you borrow.

What you can actually influence

Ask at term sheet stage, in writing:

What collateral will be taken, listed item by item?
Is a lien on my personal residence required, and at what point does it drop out of the picture?
What liquidation values are you applying, and what is the resulting shortfall?
Will you release specific collateral as the balance amortizes, and on what conditions?
Is this loan under the small-loan threshold where your conventional policy applies?

Some of this is genuinely negotiable — which parcel, release provisions, the order of recourse. The blanket lien on business assets and the guarantee are not.

The part worth thinking about slowly

An SBA lender that takes your home is not being punitive. When the loan defaults, the SBA reviews whether the lender took the collateral the rules required, and a lender that went easy on you can have its guarantee reduced for it.

That is the mechanism. Knowing it does not change the decision you have to make: whether a long-term, fully amortizing loan is worth a lien on the place you live. For plenty of owners it is. Make the call at term sheet stage, deliberately, while you still have the option of walking away.