The 7(a) Lender identifies collateral with practices at least as thorough as for comparable non-SBA loans, secures refinanced debt (other than trading assets) with at least the same collateral and priority (excess or comparable substitute collateral allowed), takes no preference for itself and uses no piggyback structure, never treats the guaranty as a substitute for available collateral (though inadequate collateral alone is not a reason to decline), and documents the effect of recorded restrictions and engineering controls (environmental indemnities running with the land removed or waived). It follows the vehicle lien, personal real estate equity (25% floor, independent value source, lien limited to shortfall or 150% of equity) and independent fixed asset appraisal rules. Commercial real estate appraisals are USPAP Appraisal Reports by an independent licensed or (above the SOP value) certified appraiser, dated within 12 months of application, naming the Lender as client or intended user, never prepared for the seller or Applicant, excluding rental income contribution and intangibles, at completion value for new or substantially renovated buildings (with a conformity statement or new appraisal after completion, and SBA approval or CLSC notice where value falls short), as-is otherwise. Where the appraisal is below 90% of the estimate the Lender needs SBA's prior written permission (PLP: a documented justification and mitigation) and above 90% a file explanation; a business transferred within 36 months also needs an appraisal review by another appraiser or a senior staff site visit.
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