Collateral

The goal is to take available collateral (valued at the liquidation value) equal to the loan amount.  Collateral may include all assets financed with loan proceeds, other business assets, and personal assets of principals.  If all available collateral does not fully secure the loan, that is acceptable BUT it is not acceptable if the loan is not secured by all available collateral.

Life Insurance - As additional protection, the SBA looks for life insurance on the individual(s) if they are tied to the viability of the business.  The amount and term must be consistent with the loan.  The amount of collateral available to repay the loan may be factored into the determination of the appropriate amount of insurance.

Use of Proceeds

Acquisition of real property (land and buildings)

Acquisition of land and construction of facilities

Purchase equipment, furniture, fixtures, or leasehold improvements

Short or long term working capital

Refinancing (subject to certain rules)