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Answer: 

For SOP 50 10 5 (f) effective 1/1/2014, collateral on loans of $25,001 to $350,000....

The requirement is for the lender to use their non-SBA policy for its similar size loans, but at a minimum take a first lien on what is being financed, and place a best available lien on the fixed assets of the business up to the loan amount.  There is no requirement to be fully secured or take collateral in excess of the loan amount.  So if a purchase money lien and lien on all fixed assets falls short of the loan amount there is no requirement to look further for collateral. Conversely if the purchase money lien and a lien on other fixed assets exceed the loan amount, the lender may exclude from collateral the fixed assets in excess of the loan amount.

On a term loan for operating capital, there is no specific asset acquired with loan proceeds on which the lender must secure a first lien. So, the lender will follow their non-SBA policy for loans of similar size, but at a minimum secure a best available lien on fixed assets up to the loan amount, if available.

SOP 50 10 5 (f) page reference - Page 165:

2. For 7(a) loans up to and including $350,000 (excluding SBA Express and Export Express).

a) For loans of $25,000 or less, the lender is not required to take collateral (personal guarantees must still be obtained in accordance with paragraph B. below); and

b) For loans over $25,000, up to and including $350,000, the lender must follow the collateral policies and procedures (what to take and how to value it) that it has established and implemented for its similarly-sized non-SBA-guaranteed commercial loans, but at a minimum the lender must take a first lien on assets financed with loan proceeds, and a lien on all of the applicant’s fixed assets to secure the loan.  Lender may secure applicant’s trading assets if it does so for similarly sized non-SBA guaranteed commercial loans. Lender may also take personally owned investment and residential real estate as collateral, and may limit the liens on that collateral in accordance with the provisions in paragraph 3

 

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