SBA rules · SOP 50 10 8.1

Does an SBA loan take a lien on my vehicles?

SBA loans do not require liens on personal vehicles of guarantors, and liens on business-owned vehicles are not required if the vehicle is already encumbered or has a value of $20,000 or less.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Business-owned vehicles: A lender is not required to take a lien on any business vehicle that already has an existing lien or whose value does not exceed $20,000 at the time the SBA loan number is assigned. If a business vehicle is unencumbered and exceeds $20,000 in value, or is purchased with loan proceeds for more than $20,000, it must be pledged as fixed-asset collateral unless a program-specific exception applies.
Personal vehicles of guarantors: The SOP does not require liens on personal vehicles owned by individual owners or guarantors. In a collateral shortfall on a 7(a) loan, the mandatory shortfall rule requires taking available equity in personal real estate, not personal vehicles.
Documentation requirements: When a lien on a business vehicle is omitted because of value or an existing lien, the lender must document in the credit memorandum whether the vehicle was already encumbered, or record the third-party valuation source and dollar amount.
Lender discretion: Although the SBA does not mandate liens on personal vehicles or on exempt business vehicles, lenders may take additional collateral if consistent with their own policies and procedures for similarly-sized non-SBA commercial loans.

The source

What the SOP says

“Except where a program specific states otherwise, a Lender is not required to take a lien on a vehicle that already has a lien or whose value does not exceed $20,000 when the SBA loan number is assigned.

SOP 50 10 8.1, Appendix 19: 7(a) Collateral Requirements > Vehicles (lines 5595-5596)✓ Verified

“The Lender must document in the credit memorandum whether the vehicle was already encumbered and, if a lien is not required because of the value, the valuation source and amount.

SOP 50 10 8.1, Appendix 19: 7(a) Collateral Requirements > Vehicles (lines 5595-5596)✓ Verified

“Collateral shortfall. If there is a collateral shortfall (not “fully secured”) on the loan the Lender: Must take available equity in personal real estate subject to requirements in paragraph A., 1., e. in this Appendix.

SOP 50 10 8.1, Appendix 19: 7(a) Collateral Requirements > The loan must be fully secured (lines 5642-5656)✓ Verified

“In identifying collateral, Lenders must use commercially reasonable and prudent practices that are at least as thorough as those used for similarly sized, non-SBA guaranteed commercial loans.

SOP 50 10 8.1, Appendix 19: 7(a) Collateral Requirements > General collateral standard (lines 5584-5586)✓ Verified

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