EIDL Collateral: What the SBA Blanket Lien Covers and How It Ranks Against an MCA Filing

A blanket lien answers fewer questions than its name promises.

The owner who learns that the SBA holds a claim on all business property treats the contest with an MCA funder as decided, and the file gives that conclusion little support. What matters is the property described in the security agreement, the validity of each filing, and the priority rules that rank competing claims when two creditors reach for the same asset.

Collateral Thresholds in the EIDL File

In August 2025 the SBA Office of Inspector General published an audit of collection efforts on delinquent COVID EIDL loans, and its tables remain the clearest public statement of how collateral and guarantees were assigned across the program. The SBA inspector general audit of EIDL collections describes no collateral or guaranty through $25,000, business collateral above that line, and personal guarantees above $200,000, subject to exceptions stated in the document.

As of December 18, 2024, the agency had charged off over $47 billion in delinquent COVID EIDL loans without suspected or confirmed fraud, and less than 1 percent of the original loan amounts had been recovered during the liquidation process. The scale of that figure explains why individual files received limited attention. It does not change the terms of any single note.

The thresholds describe the program as designed, though individual files depart from the pattern with enough frequency that counsel reads the note before quoting the table. Retrieve the executed note, the security agreement, and any amendment tied to an increased loan amount. The operative documents decide the obligation, not the remembered figure from origination.

The Security Agreement Controls the Description

A financing statement gives notice to the world, while the security agreement is the document that creates the claim against the property. Owners reverse this order constantly, treating the public filing as the full measure of the lien while the agreement sits unread in a drawer like a coat left on a chair, present and claimed and never examined.

The grant was, if we are being precise, a claim against described business property rather than a verdict on every object inside the building. Compare the description with the assets the business actually owns. Equipment, inventory, and receivables each raise their own questions, and property the business leases or holds for another party requires ownership records before anyone promises it to a creditor. The distinction carries extremely large consequences where sale proceeds are already committed.

An MCA financing statement may describe property that overlaps the EIDL collateral, or it may describe something adjacent that only appears to overlap (counsel for funders will describe either version as routine diligence). Place the documents side by side and identify the actual conflict. The legal question concerns rights in particular property, not a contest between the names of financing products.

Do not assume an owner residence or personal account is included because the business uses it. The identity of the granting party and the ownership record require attention before that conclusion. Most owners call after the collateral is gone. I understand why.

Priority Between the SBA Filing and an MCA Filing

The New York priority rules for conflicting security interests rank conflicting perfected interests by the earlier time of filing or perfection, and a perfected interest has priority over a conflicting unperfected one. The statute also preserves other priority provisions that turn on the type of collateral or the method of perfection, so a general filing date comparison cannot decide every dispute.

Rarely does the first page of the file decide the contest. The loan first funded ends few of these inquiries, because attachment, perfection, continuation, and amendment each contribute a date to the ledger. Counsel must examine the chain for each claimed interest rather than accept the earliest remembered advance as the answer.

The ledger, not the calendar of advances, decides who stands first.

Obtain filing histories with any continuation, amendment, or termination affecting the property. Subordination agreements and written consents belong with the related documents, so protect and preserve the set together, since an informal assurance from a broker does not establish that a creditor agreed to change its position. Ask counsel to identify the governing jurisdiction, because the place where the business operates is useful information without being the complete legal inquiry.

What the owner discloses, or withholds, in the first conference with counsel shapes the strategy that follows. A funder may redirect customer payments in order to improve its own position before any tribunal examines priority, and any direction of proceeds elsewhere, even briefly, can alter the posture of the dispute. Resist the urge to resolve the contest by paying whichever creditor demands payment first. A collection call is not a priority determination.

Federal Priority and Its Limits

The federal priority statute for government claims directs payment of government claims first in specified insolvency and estate circumstances. The same subsection excludes cases under Title 11 from its reach. The government claim has priority. It also yields inside a bankruptcy case.

That distinction belongs in every memorandum on this subject, because advisers sometimes invoke federal priority as though it decided all collateral contests in all forums. It does not. Whether courts outside New York apply the same analysis to these filings is a question I cannot answer from this desk, and counsel in the relevant jurisdiction should address it. That surprises owners who equated federal status with automatic victory.

The audit found that SBA had not perfected its interests in borrower deposit accounts through control agreements in the practices examined. That historical finding shows why a filing description does not resolve every perfection question. The rest is a matter of dates on filed pages.

Servicing Requests and Private Debt Review

SBA maintains distinct servicing processes for collateral release, substitution, and subordination, and the current EIDL servicing guidance directs borrowers to submit the request matching the proposed transaction. Retain the submission and the written determination with the security documents. Silence from the agency is not consent.

Delancey Street review of business debt concerns offers a free confidential initial review with emphasis on MCA obligations. Delancey Street is a debt settlement company, not a law firm, and independent counsel handles legal work including the priority analysis. Ask the adviser to ensure the proposal uses funds available for that purpose, and counsel should ensure any required consent or release is obtained through the appropriate process.

We review the terms, identify the deficiencies, and construct a response that addresses both the federal claim and the practical demands on the account. Simply preserve the approvals and completed filings where the next reviewer can find them. An extremely broad description still requires legal analysis of the particular property and the competing claim, and the ledger repays the effort.