Small Business Administration v. Michael Bensal, et al
Filing
FILED OPINION (MICHAEL DALY HAWKINS, MARSHA S. BERZON and MARY H. MURGUIA) AFFIRMED. Judge: MHM Authoring. FILED AND ENTERED JUDGMENT. [10381995]
Case: 14-17404, 04/04/2017, ID: 10381995, DktEntry: 32-2, Page 1 of 3
MENU
Loans & Grants
i
Connect with SBAved
arch
404
7
Lenders
14-1
Video: SBA Loans
Explained
17
1, 20
on
h3
Marc
o.
Blogs on
Financing
al, N
BA
ns
v. Be
S
SBA.gov » Loans & Grants » Get Ready to Apply » Check Your Credit » Collateral
d in
cite
Collateral
What Is Collateral?
Collateral is an additional form of security which can be used to assure a lender that you have a second source of loan repayment.
Assets such as equipment, buildings, accounts receivable, and (in some cases) inventory are considered possible sources of repayment
if they can be sold by the bank for cash. Collateral can consist of assets that are usable in the business as well as personal assets that
remain outside the business. This collateral table [link to collateral table in Understanding the Basics/Collateral) shows how different
forms of collateral are valued by a typical lender and SBA.
You can assume that all assets financed with borrowed funds will be used as collateral for the loan. Depending on how much equity was
contributed by you toward the acquisition of these assets, the lender may require other business assets as collateral.
Certified appraisals are required for loans greater than $250,000 secured by commercial real estate. The SBA may require professional
appraisals of both business and personal assets, plus any necessary survey and/or feasibility study. When real estate is being used as
collateral, banks and other regulated lenders are required by law to obtain third-party valuation on transactions of $50,000 or more.
Your Home or Personal Assets May Be Considered as Collateral
Owner-occupied residences generally become collateral when:
The lender requires the residence as collateral
The equity in the residence is substantial and other credit factors / sources of collateral are weak
Such collateral is necessary to assure that the principal(s) remain committed to the success of the venture for which the loan is
being made
Case: 14-17404, 04/04/2017, ID: 10381995, DktEntry: 32-2, Page 2 of 3
You operate the business out of the residence or other buildings located on the same parcel of land
To the extent that worthwhile assets are available, adequate collateral is required as security on all SBA loans. However, the SBA will
generally not decline a loan when inadequacy of collateral is the only unfavorable factor.
For all SBA loans, personal guaranties are required from every owner of 20 percent or more of the business, as well as from other
individuals who hold key management positions. Whether a guaranty will be secured by personal assets or not is based on the value of
the assets already pledged and the value of the assets personally owned compared to the amount borrowed.
Related Articles:
Home-Based Businesses
SBA Loans
What SBA Offers to Help Small Businesses Grow
Working Capital
Related Success Stories:
Small Business Owner Receives SBA Loans for Start-up, Growth
Young Business Owner Receives SBA Loan for Growth
17
1, 20
n
ed o
What We Do
cited
740
14-1
s
. Ben
Av
in SB
o.
al, N
hiv
4 arc
h3
Marc
SBA Team
SBA News Room
SBA Performance
FOIA
Oversight & Advocacy
Contact SBA
Privacy Policy
SBA En Español
Blog
Case: 14-17404, 04/04/2017, ID: 10381995, DktEntry: 32-2, Page 3 of 3
U.S. Small Business Administration
409 3rd St, SW. Washington DC 20416
17
1, 20
n
ed o
s
. Ben
cited
Av
in SB
o.
al, N
14-1
740
hiv
4 arc
h3
Marc
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?