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.
“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.
“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.
“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.
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.