[Olderguy]

Typically an engagement or committment letter for a SBA loan requires collateralization of all business assets. (non bank lenders can also use some personal assets too).

This presents a problem for business owners who have vehicles used in the operations.....and truckers too....anything that is free and clear - lender needs to hold title.

The obvious issue is that the loan is for 10 years and you typically can't hold a vehicle that long.

When this happens here's what to do:

Have them go back to the credit committee and ask them to remove just the vehicles and/or trucks.

In just about every instance I have had them be able to do this AS LONG AS THERE ARE OTHER ASSETS TO STILL GUARANTEE THE LOAN.

None of the lenders that I've dealt with have offered that and it's only by experience that I have been able to do this for several clients with push back from me.

Just FYI.

Reach out if you have any other SBA questions.

[Olderguy]

Many truckers who get SBA loans DO need to collateralize their trucks. If that is part of the loan...

The borrower needs to notify the bank if he plans to sell a truck. Proceeds of the sale are required to pay down the SBA loan.

The borrower cannot use the truck as a trade unless the new vehicle will be owned free and clear and we can take the title (collateral swap).

Lender does not take second position liens on vehicles, therefore he can not trade the truck on a new vehicle being financed.

He will be signing the title over to lender - will listed as the lienholder.