Lenders are not required to take collateral for loans up to $50,000. (Effective 8/1/23)
For loans greater than $50,000 up to $500,000 the lender may also look for additional collateral from the guarantor such as equity in residential or investment real estate to collateralize the loan.
For loans more than $500,000, the SBA requires that the lender collateralize the loan to the fullest extent possible up to the loan amount. If business fixed assets do not “fully secure” the loan the lender may include trading assets (accounts receivable & inventory) and must take available equity in the personal real estate (residential and investment) of the principals as collateral.
SBA considers a loan as “fully secured” if the Lender has taken security interests in all assets being acquired, refinanced, or improved with the 7(a) loan and available fixed assets of the Applicant with a combined Net Book Value as adjusted below, up to the loan amount. The term “fixed assets” means real estate, including land and structures, machinery and equipment owned by the business or guarantor.

• Any Improved Real Estate- 85%
• Residential or Commercial Land- 50%
• New machinery and equipment- 75%
• Used or existing machinery and equipment- 50% of net book value OR 80% with a liquidation appraisal

Make sure to talk with your Gesa SBA Relationship Manager to structure the best deal for you.

*Source: sba.gov