SBA Form 1059, Security Agreement
What Is SBA Form 1059?
SBA Form 1059, Security Agreement is a form that grants a security interest in the Borrower or Guarantor's personal guaranty as described in the agreement with the Certified Development Company (CDC) - or the Secured Party. The form is optional for Small Business Administration (SBA) 7(a) loans but is mandatory for all 504 loans.
The SBA released the latest edition of the form in February 2004 with all previous releases obsolete. The most recent SBA Form 1059 fillable version is available for download and digital filing below:
CDCs may substitute a provision or several provisions of the SBA security agreement. To do so, the CDC’s council must issue a legal opinion to the SBA concluding that use of these provisions would jeopardize the security interest securing the loan or conflict with State law.
SBA Form 1059 Instructions
The form consists of four sections in total: Section I (Information Grid), Section II (Obligations Secured), Section III (Collateral Description), and Section IV (Perfection of Security Interest).
1. Section I - Information Grid.
Most of the required information will come from the 7(a) or 504 Loan Authorization and must be consistent with the data provided on all other loan documents.
- Copy the SBA Loan Number and Loan Name from the Authorization.
- Enter the name of the Debtor. The Debtor is the individual or organization that executes the Security Agreement and is granting the security interest in the Collateral described on the SBA Form 1059. Insert the exact full legal name (as shown in the public records) for corporations, LLCs or partnerships acting as Debtors. The name or names of the Debtor must be the same as in the signature block.
- Copy all of the names of the Borrower exactly from the Authorization.
- The Secured Party is the Lender (for all 7(a) loans) or the Certified Development Company (for all 504 loans).
- Insert the date of signing the SBA 1059.
- Copy the Note amount from the Note.
2. Section II - Obligations Secured.
Fill in the blanks with the date of the Note, the name of Borrower (which must match the Borrower name in the information on the front page of the form), the Payee (the Lender for 7(a) loans and the CDC for 504 loans), and the Note amount.
3. Section III - Collateral Description.
Mark the applicable boxes to indicate the Collateral in which the security interest is granted:
- If letters “a” (equipment) or “b” (fixtures) are marked, the Lender or CDC will be required to obtain a list of all equipment and fixtures that are collateral for the loan.
- If letters “j” (deposit accounts) or “k” (investment property) are marked, the Debtor must draft a Control Agreement with the Lender and either the bank that maintains the deposit account or the securities intermediary that maintains the securities account.
- If the collateral is described with the letter “l” (titled motor vehicles), the Debtor must list their make, model and serial number in the provided space.
4. Section IV - Perfection of Security Interest.
The security interests described on the SBA Form 1059 must be perfected as required under Article 9 of the Uniform Commercial Code (UCC).