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Glossary

Collateral shortfall

When the pledged assets are worth less than the loan. Extremely common in service business acquisitions where most of what you bought is goodwill.

Why it matters to you

A shortfall doesn't sink the deal. SBA lending is cash-flow lending, not asset lending — that's the entire point of the guaranty. What it usually means in practice is a lien on any real estate you personally own.

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