{"ok":true,"canonical_url":"https://dealroom.so/glossary","api_url":"https://dealroom.so/api/public/glossary","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"results":[{"slug":"7a-loan","term":"7(a) loan","group":"The loan itself","definition":"The SBA's main loan program. 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It protects the bank. You still owe the full loan.","url":"https://dealroom.so/glossary/guaranty","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"guaranty-fee","term":"Guaranty fee","group":"The loan itself","definition":"A one-time SBA fee, charged on the guaranteed part of the loan — roughly 2–3.5% depending on size. Usually rolled into the loan.","url":"https://dealroom.so/glossary/guaranty-fee","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"term-maturity","term":"Term / maturity","group":"The loan itself","definition":"How long you have to repay. Business purchases get 10 years, or up to 25 if real estate is most of the deal.","url":"https://dealroom.so/glossary/term-maturity","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"variable-rate","term":"Variable rate","group":"The loan itself","definition":"Your interest rate moves with WSJ Prime, usually adjusting quarterly. Most 7(a) loans work this way.","url":"https://dealroom.so/glossary/variable-rate","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"wsj-prime","term":"WSJ Prime","group":"The loan itself","definition":"The base interest rate published by the Wall Street Journal. Your rate is Prime plus a spread.","url":"https://dealroom.so/glossary/wsj-prime","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"spread","term":"Spread","group":"The loan itself","definition":"What the lender adds on top of Prime. The SBA caps it — 3% for loans over $350K. Strong borrowers negotiate under the cap.","url":"https://dealroom.so/glossary/spread","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"plp-lender","term":"PLP lender","group":"The loan itself","definition":"A Preferred Lending Partner — a bank the SBA trusts to approve loans without sending the file to the SBA first. They close faster.","url":"https://dealroom.so/glossary/plp-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"sop-50-10","term":"SOP 50 10","group":"The loan itself","definition":"The SBA's rulebook for lenders. The current version (50 10 8) took effect June 1, 2025. When rules change, this is the document that changed.","url":"https://dealroom.so/glossary/sop-50-10","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"business-acquisition-loan","term":"Business acquisition loan","group":"The loan itself","definition":"Any loan used to buy an existing business. The SBA 7(a) is the most common kind for deals under $5M because it allows 10% down against cash flow.","url":"https://dealroom.so/glossary/business-acquisition-loan","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"sba-express","term":"SBA Express","group":"The loan itself","definition":"A faster, smaller 7(a) variant: up to $500K with a 50% guarantee. Quicker approval, but less lender appetite for acquisitions.","url":"https://dealroom.so/glossary/sba-express","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"amortization","term":"Amortization","group":"The loan itself","definition":"Paying a loan down in equal monthly payments of principal and interest. 7(a) acquisition loans fully amortize — no balloon payment at the end.","url":"https://dealroom.so/glossary/amortization","official_sources":[],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"balloon-payment","url":"https://dealroom.so/glossary/balloon-payment"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"balloon-payment","term":"Balloon payment","group":"The loan itself","definition":"A large lump sum due at the end of some loans. SBA 7(a) loans never have one; many seller notes do — read yours.","url":"https://dealroom.so/glossary/balloon-payment","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"form-1919","term":"Form 1919","group":"The loan itself","definition":"The borrower information form every applicant signs. It asks about ownership, citizenship, criminal status, and federal debt.","url":"https://dealroom.so/glossary/form-1919","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"equity-injection","term":"Equity injection","group":"Your money in the deal","definition":"Your down payment, in SBA language. Minimum 10% of total project costs for a full business purchase.","url":"https://dealroom.so/glossary/equity-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"total-project-costs","term":"Total project costs","group":"Your money in the deal","definition":"Purchase price plus fees, closing costs, and working capital. The 10% injection is measured against this number, which runs higher than the price alone.","url":"https://dealroom.so/glossary/total-project-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"seller-note","term":"Seller note","aka":"seller financing","group":"Your money in the deal","definition":"Part of the price the seller lets you pay over time instead of at closing. Common, and a good sign the seller believes in the business.","url":"https://dealroom.so/glossary/seller-note","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"form-155","url":"https://dealroom.so/glossary/form-155"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"balloon-payment","url":"https://dealroom.so/glossary/balloon-payment"}]},{"slug":"standby","term":"Standby","group":"Your money in the deal","definition":"An agreement that the seller's note gets no payments until certain conditions are met. A seller note only counts toward your 10% if it's on full standby — zero payments — for the life of the loan.","url":"https://dealroom.so/glossary/standby","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"form-155","url":"https://dealroom.so/glossary/form-155"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"form-155","term":"Form 155","group":"Your money in the deal","definition":"The standby agreement document. It also stops the seller from acting against you or the collateral without the lender's consent.","url":"https://dealroom.so/glossary/form-155","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"robs","term":"ROBS","group":"Your money in the deal","definition":"Rollovers as Business Startups — a legal structure that lets you use 401(k) or IRA money for the down payment without early-withdrawal penalties.","url":"https://dealroom.so/glossary/robs","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"seasoned-funds","term":"Seasoned funds","group":"Your money in the deal","definition":"Money that has sat in your account long enough (about two months of statements) for the lender to see where it came from. Move your injection cash early.","url":"https://dealroom.so/glossary/seasoned-funds","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"out-of-pocket","term":"Out of pocket","group":"Your money in the deal","definition":"Everything you actually write checks for: down payment, guaranty fee, closing costs, and a working-capital cushion.","url":"https://dealroom.so/glossary/out-of-pocket","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"ebitda","term":"EBITDA","group":"Reading the business","definition":"Earnings before interest, taxes, depreciation, and amortization. A standard measure of what the business earns from operations.","url":"https://dealroom.so/glossary/ebitda","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"}]},{"slug":"sde","term":"SDE","aka":"seller's discretionary earnings","group":"Reading the business","definition":"EBITDA plus the owner's salary and perks. For small businesses, this is the truest picture of what the business pays its owner.","url":"https://dealroom.so/glossary/sde","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"}]},{"slug":"owner-earnings","term":"Owner earnings","group":"Reading the business","definition":"Casual term for SDE or adjusted EBITDA — the yearly cash an owner-operator takes out.","url":"https://dealroom.so/glossary/owner-earnings","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"add-backs","term":"Add-backs","group":"Reading the business","definition":"Personal or one-time expenses added back to profit to show true earnings (owner's car, one-time lawsuit). Lenders only accept documented ones.","url":"https://dealroom.so/glossary/add-backs","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"multiple","term":"Multiple","group":"Reading the business","definition":"Price divided by earnings. A business earning $500K listed at 3x costs $1.5M. Multiples let you compare deals of different sizes.","url":"https://dealroom.so/glossary/multiple","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"dscr","term":"DSCR","aka":"debt service coverage ratio","group":"Reading the business","definition":"Yearly cash flow divided by yearly loan payments. 1.25x means $1.25 of cash for every $1 of payments. Lenders want 1.1x minimum, 1.25x to get comfortable.","url":"https://dealroom.so/glossary/dscr","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"cash-flow-after-debt-service","term":"Cash flow after debt service","group":"Reading the business","definition":"What's left for you each year after loan payments. The first number to check on any listing.","url":"https://dealroom.so/glossary/cash-flow-after-debt-service","official_sources":[],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"working-capital","term":"Working capital","group":"Reading the business","definition":"Cash the business needs on hand to operate — payroll, inventory, the gap between paying suppliers and getting paid.","url":"https://dealroom.so/glossary/working-capital","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"goodwill","term":"Goodwill","group":"Reading the business","definition":"The part of the price above the value of physical assets — the customer base, reputation, and cash flow you're really buying.","url":"https://dealroom.so/glossary/goodwill","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"business-valuation","term":"Business valuation","group":"Reading the business","definition":"An independent appraisal the lender orders. The SBA loan can't finance any amount above it.","url":"https://dealroom.so/glossary/business-valuation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"irs-transcripts","term":"IRS transcripts (4506-T)","group":"Reading the business","definition":"The seller's tax records, pulled straight from the IRS. Lenders match them against the books they were shown. Mismatches kill deals.","url":"https://dealroom.so/glossary/irs-transcripts","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"key-man-insurance","term":"Key man insurance","aka":"key person insurance","group":"People and paperwork","definition":"A life policy on someone whose death would damage the business. Lenders often require it on you; smart buyers also put it on the seller during the transition. See our full guide at /seller-life-insurance.","url":"https://dealroom.so/glossary/key-man-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"business-broker","term":"Business broker","group":"People and paperwork","definition":"The seller's agent on smaller deals — lists the business, screens buyers, runs the process. Paid by the seller, usually around 10% of the price.","url":"https://dealroom.so/glossary/business-broker","official_sources":[],"related":[{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"ma-advisor","term":"M&A advisor","group":"People and paperwork","definition":"A broker for larger deals, typically $1M+ in value. Runs a structured process with multiple buyers and deeper financial packaging.","url":"https://dealroom.so/glossary/ma-advisor","official_sources":[],"related":[{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"cim-deal-book","url":"https://dealroom.so/glossary/cim-deal-book"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"}]},{"slug":"nda-buyer-verification","term":"NDA","aka":"non-disclosure agreement","group":"People and paperwork","definition":"The contract you sign to see a business's confidential details. On DealRoom this is the Buyer Verification step before a Deal Book opens.","url":"https://dealroom.so/glossary/nda-buyer-verification","official_sources":[],"related":[{"slug":"cim-deal-book","url":"https://dealroom.so/glossary/cim-deal-book"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"cim-deal-book","term":"CIM","aka":"confidential information memorandum","group":"People and paperwork","definition":"The full write-up of a business for sale: financials, operations, team, growth. DealRoom presents it as a structured Deal Book instead of a 40-page PDF.","url":"https://dealroom.so/glossary/cim-deal-book","official_sources":[],"related":[{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"proof-of-funds","term":"Proof of funds","group":"People and paperwork","definition":"Evidence you can actually buy — bank or brokerage statements. Verified buyers on DealRoom show it once and every advisor sees the badge.","url":"https://dealroom.so/glossary/proof-of-funds","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"cim-deal-book","url":"https://dealroom.so/glossary/cim-deal-book"}]},{"slug":"earnout","term":"Earnout","group":"People and paperwork","definition":"Part of the price paid later, only if the business hits agreed targets. Note: earnouts are not allowed in SBA 7(a) deals — use a seller note instead.","url":"https://dealroom.so/glossary/earnout","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"non-compete","term":"Non-compete","group":"People and paperwork","definition":"The seller's promise to stay out of the same business nearby for a set time. Standard in every purchase agreement; lenders expect it.","url":"https://dealroom.so/glossary/non-compete","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"escrow-holdback","term":"Escrow / holdback","aka":"holdback","group":"People and paperwork","definition":"Money parked with a neutral third party after closing to cover surprises, like unpaid taxes or broken promises in the contract.","url":"https://dealroom.so/glossary/escrow-holdback","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"search-fund","term":"Search fund / searcher","aka":"searcher","group":"People and paperwork","definition":"A buyer (often backed by investors) whose full-time job is finding one business to buy and run. A growing share of small-business buyers.","url":"https://dealroom.so/glossary/search-fund","official_sources":[],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"loi","term":"LOI","aka":"letter of intent","group":"Doing the deal","definition":"A short, mostly non-binding agreement on price and terms that starts the formal process. Underwriting time is measured from here.","url":"https://dealroom.so/glossary/loi","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"change-of-ownership","term":"Change of ownership","group":"Doing the deal","definition":"SBA's term for buying a business. Complete means you buy all of it; partial means you buy a piece (equity purchases only).","url":"https://dealroom.so/glossary/change-of-ownership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"asset-purchase","term":"Asset purchase","group":"Doing the deal","definition":"Buying the business's assets and goodwill into your new company, leaving the old entity behind. The most common small-deal structure.","url":"https://dealroom.so/glossary/asset-purchase","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"stock-purchase","term":"Stock purchase","aka":"equity purchase","group":"Doing the deal","definition":"Buying the company itself, ownership papers and all. Required for partial buyouts.","url":"https://dealroom.so/glossary/stock-purchase","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"due-diligence","term":"Due diligence","group":"Doing the deal","definition":"Your inspection period: verifying financials, contracts, customers, and everything the seller claimed.","url":"https://dealroom.so/glossary/due-diligence","official_sources":[],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"cim-deal-book","url":"https://dealroom.so/glossary/cim-deal-book"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"personal-guarantee","term":"Personal guarantee","group":"Doing the deal","definition":"Your signed promise to repay personally if the business can't. Required from every owner of 20% or more. No exceptions.","url":"https://dealroom.so/glossary/personal-guarantee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"ucc-lien","term":"UCC lien","group":"Doing the deal","definition":"The lender's public claim on the business's assets as collateral. Standard on every 7(a).","url":"https://dealroom.so/glossary/ucc-lien","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"collateral-shortfall","term":"Collateral shortfall","group":"Doing the deal","definition":"When the business's assets are worth less than the loan. Allowed on 7(a) loans — the lender may take a lien on other assets you own.","url":"https://dealroom.so/glossary/collateral-shortfall","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"life-insurance-assignment","term":"Life insurance assignment","group":"Doing the deal","definition":"A policy on you, payable to the lender. Required when the business depends on you and collateral falls short of the loan.","url":"https://dealroom.so/glossary/life-insurance-assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"franchise-directory","term":"Franchise Directory","group":"Doing the deal","definition":"The SBA's list of approved franchise brands. A franchise must be on it to get a 7(a). Check before you fall in love.","url":"https://dealroom.so/glossary/franchise-directory","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"standby-agreement","term":"Standby agreement","group":"Your money in the deal","definition":"A formal agreement where a lender or seller defers payments on a debt, allowing the SBA loan to take priority. It's crucial for meeting SBA equity injection requirements without impacting the business's immediate cash flow.","url":"https://dealroom.so/glossary/standby-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"disguised-debt","term":"Disguised debt","group":"Your money in the deal","definition":"Money injected by the buyer or seller that looks like equity but functions like a loan, often with an expectation of repayment. The SBA scrutinizes this to ensure true equity injection and proper debt structuring.","url":"https://dealroom.so/glossary/disguised-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"partner-buyout","term":"Partner buyout","group":"Doing the deal","definition":"The process of one or more partners acquiring the ownership interest of another partner in a business. An SBA 7(a) loan can finance this if specific conditions are met, such as a change of ownership.","url":"https://dealroom.so/glossary/partner-buyout","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"franchise","term":"Franchise","group":"Reading the business","definition":"A business model where an independent business owner (franchisee) operates under the brand and system of a larger company (franchisor). If you're buying a franchise, the SBA has specific eligibility requirements.","url":"https://dealroom.so/glossary/franchise","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"}]},{"slug":"affiliation","term":"Affiliation","group":"Reading the business","definition":"The relationship between two or more businesses where one controls or has the power to control the other, or a third party controls both. The SBA uses strict affiliation rules to determine if a business is 'small' and eligible for a 7(a) loan.","url":"https://dealroom.so/glossary/affiliation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"franchise-agreement","term":"Franchise agreement","group":"People and paperwork","definition":"The legal contract outlining the terms and conditions between a franchisor and a franchisee, including rights, responsibilities, and fees. The SBA reviews this agreement carefully for eligibility.","url":"https://dealroom.so/glossary/franchise-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"}]},{"slug":"sba-guaranty","term":"SBA guaranty","group":"The loan itself","definition":"A commitment by the Small Business Administration to reimburse a lender for a portion of a loan's outstanding balance if the borrower defaults. This reduces risk for lenders, making loans more accessible to small businesses.","url":"https://dealroom.so/glossary/sba-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"marketable-securities","term":"Marketable securities","group":"Your money in the deal","definition":"Investments like stocks, bonds, or mutual funds that can be quickly converted to cash. These can be used as part of your equity injection or pledged as collateral for an SBA loan, if unencumbered.","url":"https://dealroom.so/glossary/marketable-securities","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"gift-letter","term":"Gift letter","group":"People and paperwork","definition":"A formal document from a third party stating that funds provided to the borrower are a gift, with no expectation of repayment. This is typically used to document a portion of the equity injection for an SBA loan.","url":"https://dealroom.so/glossary/gift-letter","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"unencumbered","term":"Unencumbered","group":"Reading the business","definition":"Describes an asset that is free of any liens, mortgages, or other legal claims by creditors. For an SBA loan, collateral must typically be unencumbered to be valuable to the lender.","url":"https://dealroom.so/glossary/unencumbered","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"round-tripped","term":"Round-tripped","group":"Your money in the deal","definition":"A prohibited transaction where funds are temporarily moved out of a business and then back in, often to make it appear as if the borrower has more equity or operating capital than they truly possess.","url":"https://dealroom.so/glossary/round-tripped","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"debt-service","term":"Debt service","group":"The loan itself","definition":"The cash required to cover the principal and interest payments on a loan over a specific period. Your ability to cover debt service is a key factor in SBA loan approval.","url":"https://dealroom.so/glossary/debt-service","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"home-equity-line-of-credit","term":"Home equity line of credit","group":"Your money in the deal","definition":"A revolving credit line secured by the equity in your home. You can use a HELOC to fund part of your equity injection for an SBA loan, provided it's properly documented.","url":"https://dealroom.so/glossary/home-equity-line-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"owner-occupied-commercial-real-estate","term":"Owner-occupied commercial real estate","group":"Reading the business","definition":"Commercial property where the business taking out the loan occupies at least 51% of the total rentable space. This is a common use of SBA 7(a) loan funds for business acquisitions.","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"appraisal","term":"Appraisal","group":"Reading the business","definition":"An appraisal is an expert's opinion on the value of an asset or business. For a buyer, it confirms the purchase price is reasonable and helps the lender assess collateral.","url":"https://dealroom.so/glossary/appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"co-borrower","term":"Co-borrower","group":"People and paperwork","definition":"A co-borrower is an additional individual or entity that shares responsibility for repaying the loan. They are equally liable for the debt alongside the primary borrower.","url":"https://dealroom.so/glossary/co-borrower","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"lien","term":"Lien","group":"The loan itself","definition":"A lien is a legal right held by a lender over assets until a debt is repaid. It gives the lender the right to seize the asset if you default on the loan.","url":"https://dealroom.so/glossary/lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"leasehold-improvement","term":"Leasehold improvement","group":"Reading the business","definition":"These are modifications made to a leased property by the tenant. As a buyer, you need to know if these improvements are included in the sale or if you'll need to invest in your own.","url":"https://dealroom.so/glossary/leasehold-improvement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"collateral","term":"Collateral","group":"The loan itself","definition":"Collateral is an asset pledged to a lender to secure a loan. If you default, the lender can seize and sell the collateral to recover their money.","url":"https://dealroom.so/glossary/collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"collateral-analysis","term":"Collateral analysis","group":"Reading the business","definition":"This is the lender's process of evaluating the value and adequacy of assets pledged to secure a loan. It determines if there's enough collateral to cover the loan in case of default.","url":"https://dealroom.so/glossary/collateral-analysis","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"cash-flow-projection","term":"Cash flow projection","group":"Reading the business","definition":"A cash flow projection estimates the future movement of cash in and out of the business. It's crucial for showing a lender the business can repay the loan.","url":"https://dealroom.so/glossary/cash-flow-projection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"recourse","term":"Recourse","group":"The loan itself","definition":"Recourse refers to the lender's right to pursue borrowers for repayment if they default on a loan, even beyond the collateral. 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This is a severe financial crime; any history of embezzlement will prevent you from obtaining an SBA loan due to character concerns.","url":"https://dealroom.so/glossary/embezzlement","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"misdemeanor","term":"Misdemeanor","group":"People and paperwork","definition":"A misdemeanor is a less serious crime than a felony, typically punishable by fines or short jail sentences. 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They identify issues like contamination that could affect the property's value or create future liabilities for you.","url":"https://dealroom.so/glossary/environmental-consultant","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"material-information","term":"Material information","group":"People and paperwork","definition":"Material information refers to facts significant enough to influence a reasonable person's decision. In a business acquisition, this includes anything that would impact your decision to purchase or the lender's decision to fund.","url":"https://dealroom.so/glossary/material-information","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"disclosure-document","url":"https://dealroom.so/glossary/disclosure-document"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"intentional-misrepresentation","term":"Intentional misrepresentation","group":"People and paperwork","definition":"Intentional misrepresentation is deliberately providing false information or concealing crucial facts to deceive another party. This is a serious offense that can invalidate a deal and lead to legal action, including federal penalties.","url":"https://dealroom.so/glossary/intentional-misrepresentation","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"}]},{"slug":"omission-of-material-facts","term":"Omission of material facts","group":"People and paperwork","definition":"Omission of material facts is failing to disclose important information that would influence a decision, even if no false statements were made. This is as serious as outright lying in a business transaction.","url":"https://dealroom.so/glossary/omission-of-material-facts","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"nondisclosure","url":"https://dealroom.so/glossary/nondisclosure"},{"slug":"fraud-allegation","url":"https://dealroom.so/glossary/fraud-allegation"}]},{"slug":"prime-rate","term":"Prime Rate","group":"The loan itself","definition":"The Prime Rate is a benchmark interest rate used by banks, often for variable-rate loans. For a buyer, this rate directly influences the interest payments on your SBA 7(a) loan, as your rate will be the Prime Rate plus a spread.","url":"https://dealroom.so/glossary/prime-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"sofr","term":"SOFR","group":"The loan itself","definition":"SOFR, or Secured Overnight Financing Rate, is another benchmark interest rate for variable-rate loans, replacing LIBOR. As a buyer, your SBA 7(a) loan might be tied to Term SOFR, affecting your interest payments.","url":"https://dealroom.so/glossary/sofr","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"base-rate","url":"https://dealroom.so/glossary/base-rate"}]},{"slug":"ongoing-servicing-fee","term":"Ongoing servicing fee","group":"The loan itself","definition":"This is an annual fee charged by the SBA to the lender for their guarantee, which the lender passes directly to you, the borrower. It's a recurring cost that adds to your overall loan expense.","url":"https://dealroom.so/glossary/ongoing-servicing-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"lender-closing-costs","term":"Lender closing costs","group":"The loan itself","definition":"These are fees and expenses charged by the lender to process and close your SBA loan, beyond the principal and interest. They add to your total project cost and can often be financed as part of the loan.","url":"https://dealroom.so/glossary/lender-closing-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"packaging-fee","term":"Packaging fee","group":"The loan itself","definition":"This is a fee paid to the lender or a loan broker for preparing and submitting your SBA loan application. It covers the administrative work involved in compiling your financial and business documents.","url":"https://dealroom.so/glossary/packaging-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"legal-fee","term":"Legal fee","group":"The loan itself","definition":"These are the costs for attorneys involved in drafting and reviewing loan documents and closing the acquisition. Both the lender and you will incur legal fees.","url":"https://dealroom.so/glossary/legal-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"prepayment-penalty","term":"Prepayment penalty","group":"The loan itself","definition":"A prepayment penalty is a fee charged if you pay off your SBA 7(a) loan early. This protects the lender from losing interest income if you refinance or sell the business sooner than expected.","url":"https://dealroom.so/glossary/prepayment-penalty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"not-engaged-in-lending-rule","term":"Not engaged in lending rule","group":"Reading the business","definition":"This SBA rule states that businesses primarily engaged in lending, such as banks or loan companies, are ineligible for 7(a) loans. It ensures SBA funding supports operating businesses, not financial intermediaries.","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","group":"Reading the business","definition":"The SBA has a list of specific business types that are ineligible for 7(a) loans, regardless of size or other factors. This rule prevents federal funds from supporting certain activities.","url":"https://dealroom.so/glossary/ineligible-businesses-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"not-engaged-in-lending-rule","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"}]},{"slug":"naics-code","term":"NAICS code","aka":"North American Industry Classification System code","group":"Reading the business","definition":"The North American Industry Classification System code is a numerical code classifying businesses by industry. For a buyer, it's crucial because it determines SBA eligibility and size standards for the target business.","url":"https://dealroom.so/glossary/naics-code","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"not-engaged-in-lending-rule","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule"}]},{"slug":"non-profit-organization","term":"Non-profit organization","group":"Reading the business","definition":"A non-profit organization is a business structured for public benefit, not private profit. Generally, these organizations are ineligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/non-profit-organization","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"veteran-owned-cooperative","term":"Veteran-owned cooperative","group":"Reading the business","definition":"While most cooperatives are ineligible for SBA 7(a) loans, certain veteran-owned cooperatives can qualify. This is a specific exception to the general rule against financing co-ops.","url":"https://dealroom.so/glossary/veteran-owned-cooperative","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"arm-s-length","term":"Arm's length","group":"Doing the deal","definition":"An arm's length transaction means the buyer and seller are independent and act in their own self-interest, without undue influence. For a buyer, this ensures fair market value and avoids conflicts of interest.","url":"https://dealroom.so/glossary/arm-s-length","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"common-management","term":"Common management","group":"Reading the business","definition":"Common management exists when two or more businesses share the same executive leadership or decision-makers. For a buyer, this is critical for understanding potential affiliation and its impact on SBA size standards.","url":"https://dealroom.so/glossary/common-management","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"}]},{"slug":"size-standard","term":"Size standard","group":"Reading the business","definition":"A size standard defines the maximum size a business can be to qualify as \"small\" for SBA programs. As a buyer, your target business must meet this standard for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/size-standard","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"negative-control","term":"Negative control","group":"Reading the business","definition":"Negative control refers to the ability of a minority owner to block significant actions of a business. This is crucial for buyers because the SBA considers anyone with negative control a \"key principal\" requiring a personal guarantee.","url":"https://dealroom.so/glossary/negative-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"qualified-alien","term":"Qualified Alien","group":"People and paperwork","definition":"A Qualified Alien is a non-U.S. citizen who holds specific immigration statuses, making them eligible for certain federal benefits, including SBA loans. If you're not a U.S. citizen, your immigration status must meet this definition to qualify for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/qualified-alien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"form-i-551","term":"Form I-551","aka":"Permanent Resident Card","group":"People and paperwork","definition":"Form I-551 is the official document proving lawful permanent resident status in the U.S., commonly known as a Green Card. If you are a permanent resident, this card is essential for demonstrating your eligibility for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/form-i-551","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"uscis","term":"USCIS","aka":"U.S. Citizenship and Immigration Services","group":"People and paperwork","definition":"USCIS is the government agency responsible for immigration services and benefits, including issuing Green Cards. They are the authority that verifies your immigration status, which is critical for SBA loan eligibility if you're not a U.S. citizen.","url":"https://dealroom.so/glossary/uscis","official_sources":[],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"}]},{"slug":"lien-position","term":"Lien position","group":"The loan itself","definition":"Lien position refers to the order in which creditors get paid from the sale of collateral if a borrower defaults. As an SBA borrower, your lender usually requires a \"first lien\" on business assets to protect their investment.","url":"https://dealroom.so/glossary/lien-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"first-lien","term":"First lien","group":"The loan itself","definition":"A first lien gives a creditor the primary right to be paid from the sale of specific collateral if a borrower defaults. For an SBA 7(a) loan, your lender will almost always require a first lien on all business assets.","url":"https://dealroom.so/glossary/first-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"accounts-receivable","term":"Accounts receivable","group":"Reading the business","definition":"Accounts receivable (A/R) represents the money owed to a business by its customers for goods or services already delivered. As a buyer, A/R is often a key asset that helps determine the business's working capital needs and can serve as collateral for your loan.","url":"https://dealroom.so/glossary/accounts-receivable","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"general-intangible","url":"https://dealroom.so/glossary/general-intangible"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"perfect-lien","term":"Perfect lien","group":"The loan itself","definition":"A perfect lien is a security interest that has been properly recorded and established, making it enforceable against third parties. Your SBA lender will \"perfect\" their lien on your business assets to protect their collateral position.","url":"https://dealroom.so/glossary/perfect-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"unperfected-lien","url":"https://dealroom.so/glossary/unperfected-lien"}]},{"slug":"ucc-filing","term":"UCC filing","aka":"UCC-1 financing statement","group":"People and paperwork","definition":"A UCC filing is a legal notice filed by a creditor to publicly declare their security interest in a borrower's personal property, like equipment or inventory. Your SBA lender will file a UCC-1 to perfect their lien on your business assets.","url":"https://dealroom.so/glossary/ucc-filing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"uniform-commercial-code","url":"https://dealroom.so/glossary/uniform-commercial-code"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"uniform-commercial-code","term":"Uniform Commercial Code","aka":"UCC","group":"People and paperwork","definition":"The Uniform Commercial Code is a set of standardized laws governing commercial transactions, including secured transactions, across U.S. states. It provides the legal framework for how your SBA lender establishes and perfects their lien on business assets.","url":"https://dealroom.so/glossary/uniform-commercial-code","official_sources":[],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"lien-priority","term":"Lien priority","group":"The loan itself","definition":"Lien priority determines which creditor has the first claim to collateral if a business defaults, based on the order in which liens were perfected. Your SBA lender will require the highest priority, a \"first lien,\" on your business assets.","url":"https://dealroom.so/glossary/lien-priority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"general-intangible","term":"General intangible","group":"Reading the business","definition":"A general intangible is a broad category of business assets that lack a physical form but have value, such as intellectual property, goodwill, or customer lists. For an SBA loan, these assets are typically included as collateral, even if hard to value.","url":"https://dealroom.so/glossary/general-intangible","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"unperfected-lien","term":"Unperfected lien","group":"The loan itself","definition":"An unperfected lien is a security interest that has not been legally established through proper filing or recording. Such a lien is vulnerable, as another creditor could perfect their lien first and take priority.","url":"https://dealroom.so/glossary/unperfected-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"}]},{"slug":"e-tran-submission","term":"E-Tran submission","group":"Doing the deal","definition":"This is how your lender officially submits your SBA loan application to the SBA for approval. It's a critical step that moves your deal forward from the lender's internal approval to the SBA's system.","url":"https://dealroom.so/glossary/e-tran-submission","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"taxpayer-identification-number","term":"Taxpayer Identification Number","aka":"TIN","group":"People and paperwork","definition":"A nine-digit number used by the IRS to identify individuals and businesses for tax purposes. You'll need this for all official financial and tax documents related to the business.","url":"https://dealroom.so/glossary/taxpayer-identification-number","official_sources":[],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"use-of-proceeds","term":"Use of proceeds","group":"The loan itself","definition":"This details exactly how the money from your SBA loan will be spent. The SBA has strict rules on what the loan funds can and cannot be used for in an acquisition.","url":"https://dealroom.so/glossary/use-of-proceeds","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"sba-loan-authorization","term":"SBA Loan Authorization","group":"People and paperwork","definition":"This is the official document from the SBA that approves your loan, detailing all the terms, conditions, and requirements. It's your blueprint for closing the deal.","url":"https://dealroom.so/glossary/sba-loan-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"amended-sba-loan-authorization","term":"Amended SBA Loan Authorization","group":"People and paperwork","definition":"A revised version of the original SBA Loan Authorization, issued when there's a change to the loan's terms or conditions after initial approval.","url":"https://dealroom.so/glossary/amended-sba-loan-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"}]},{"slug":"penalty-of-perjury","term":"Penalty of perjury","group":"People and paperwork","definition":"A legal warning stating that the information you're providing is true and accurate to the best of your knowledge, and that lying carries serious legal consequences.","url":"https://dealroom.so/glossary/penalty-of-perjury","official_sources":[],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"underwriting","term":"Underwriting","group":"Doing the deal","definition":"The lender's process of evaluating your creditworthiness and the business's financial health to decide if they should approve your loan and under what terms.","url":"https://dealroom.so/glossary/underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"environmental-questionnaire","term":"Environmental Questionnaire","aka":"SBA Form 1081","group":"People and paperwork","definition":"A form completed by the borrower and seller to identify potential environmental risks associated with the business property.","url":"https://dealroom.so/glossary/environmental-questionnaire","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"}]},{"slug":"recognized-environmental-condition","term":"Recognized Environmental Condition","aka":"REC","group":"Reading the business","definition":"An environmental term for the presence or likely presence of hazardous substances or petroleum products on a property, indicating potential contamination.","url":"https://dealroom.so/glossary/recognized-environmental-condition","official_sources":[],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"phase-i-environmental-site-assessment","term":"Phase I Environmental Site Assessment","aka":"Phase I ESA","group":"Reading the business","definition":"A professional investigation of a property's past and current uses to identify potential environmental contamination and liability.","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"phase-ii-environmental-site-assessment","term":"Phase II Environmental Site Assessment","aka":"Phase II ESA","group":"Reading the business","definition":"A more in-depth environmental study that involves collecting samples (soil, water, air) to confirm the presence and extent of contamination identified in a Phase I ESA.","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"}]},{"slug":"key-principal","term":"Key principal","group":"People and paperwork","definition":"Any individual who owns 20% or more of the business, or holds a position of significant influence or control.","url":"https://dealroom.so/glossary/key-principal","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business 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A default can lead to serious consequences, including losing the business or personal assets.","url":"https://dealroom.so/glossary/loan-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"universal-purchase-package","term":"Universal Purchase Package","aka":"UPP","group":"People and paperwork","definition":"A standardized set of documents and disclosures required by the SBA for certain loan applications, streamlining the application process. It ensures lenders and borrowers provide consistent, necessary information.","url":"https://dealroom.so/glossary/universal-purchase-package","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"servicing","term":"Servicing","group":"Doing the deal","definition":"The ongoing management of your loan by the lender after closing, including collecting payments, handling inquiries, and managing any issues that arise. Effective servicing is crucial for the life of your loan.","url":"https://dealroom.so/glossary/servicing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"guaranty-purchase-request","term":"Guaranty purchase request","group":"The loan itself","definition":"When a lender requests the SBA to buy back the guaranteed portion of a defaulted loan. 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It reflects the cost of borrowing cash overnight, providing a forward-looking rate for your loan's interest adjustments.","url":"https://dealroom.so/glossary/term-sofr","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"libor","url":"https://dealroom.so/glossary/libor"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"libor","term":"LIBOR","aka":"London Interbank Offered Rate","group":"The loan itself","definition":"LIBOR was a global benchmark interest rate for variable-rate loans. It has been phased out and replaced by new benchmarks like Term SOFR for SBA loans.","url":"https://dealroom.so/glossary/libor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"note","term":"Note","aka":"Promissory note","group":"People and paperwork","definition":"The Note is your formal promise to repay the loan. 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They are critical for evaluating the potential success and repayment capacity of your acquisition.","url":"https://dealroom.so/glossary/financial-projections","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"inventory","term":"Inventory","group":"Reading the business","definition":"Inventory refers to the goods a business holds for sale or materials used in production. It's a current asset that impacts valuation, working capital, and often serves as collateral for loans.","url":"https://dealroom.so/glossary/inventory","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"intangible-asset","term":"Intangible asset","group":"Reading the business","definition":"An intangible asset is a non-physical asset that has economic value, such as goodwill, patents, trademarks, customer lists, or brand recognition. These are often crucial to a business's long-term value.","url":"https://dealroom.so/glossary/intangible-asset","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"business-debt-refinancing","term":"Business debt refinancing","group":"The loan itself","definition":"Business debt refinancing involves replacing existing business debt with a new loan, often to get better terms, lower interest rates, or consolidate multiple debts.","url":"https://dealroom.so/glossary/business-debt-refinancing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"}]},{"slug":"small-business","term":"Small business","group":"The loan itself","definition":"For SBA loan purposes, a small business is defined by specific size standards, usually based on average annual revenue or number of employees, which vary by industry.","url":"https://dealroom.so/glossary/small-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"eligibility","url":"https://dealroom.so/glossary/eligibility"}]},{"slug":"good-character","term":"Good character","group":"People and paperwork","definition":"Good character refers to the borrower's honesty, integrity, and financial track record, which lenders assess to determine creditworthiness and reliability.","url":"https://dealroom.so/glossary/good-character","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"5-cs","url":"https://dealroom.so/glossary/5-cs"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"fixed-interest-rate","term":"Fixed interest rate","group":"The loan itself","definition":"A fixed interest rate remains constant throughout the life of the loan. This provides predictable monthly payments, making budgeting easier.","url":"https://dealroom.so/glossary/fixed-interest-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"variable-interest-rate","term":"Variable interest rate","group":"The loan itself","definition":"A variable interest rate fluctuates over the loan's term, typically tied to a benchmark like Term SOFR plus a fixed spread. This means your monthly payments can change.","url":"https://dealroom.so/glossary/variable-interest-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"credit-elsewhere-test","term":"Credit elsewhere test","group":"The loan itself","definition":"This is an SBA rule requiring that you cannot get a conventional loan on reasonable terms to be eligible for an SBA 7(a) loan. Buyers care because lenders must document this, proving you truly need the SBA guarantee to secure financing.","url":"https://dealroom.so/glossary/credit-elsewhere-test","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"mortgage","term":"Mortgage","group":"Doing the deal","definition":"A mortgage is a loan secured by real estate, meaning the property itself serves as collateral. Buyers care because if the business includes real estate, it will be pledged, impacting the deal's structure and your personal risk.","url":"https://dealroom.so/glossary/mortgage","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"second-mortgage","url":"https://dealroom.so/glossary/second-mortgage"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"second-mortgage","term":"Second mortgage","group":"Doing the deal","definition":"This is a loan secured by real estate that is subordinate to a first mortgage, meaning the first lender gets paid back first. Buyers care because it indicates another lender has a prior claim on the property, affecting your equity and risk.","url":"https://dealroom.so/glossary/second-mortgage","official_sources":[],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"conventional-loan","term":"Conventional loan","group":"The loan itself","definition":"A traditional bank loan not backed by a government agency like the SBA. Buyers care because if you qualify for a conventional loan, you likely won't be eligible for an SBA loan due to the 'credit elsewhere test'.","url":"https://dealroom.so/glossary/conventional-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"global-cash-flow","term":"Global cash flow","group":"Reading the business","definition":"This is the combined cash flow from the business you're buying and your personal income and debts. Lenders use it to assess your total capacity to repay all outstanding obligations, including your new SBA loan.","url":"https://dealroom.so/glossary/global-cash-flow","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"line-of-credit","term":"Line of credit","group":"The loan itself","definition":"A flexible loan that allows a business to borrow, repay, and re-borrow up to a set limit. Buyers care because it's crucial for managing working capital, covering seasonal fluctuations, and handling unexpected operational expenses post-acquisition.","url":"https://dealroom.so/glossary/line-of-credit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"tangible-asset","term":"Tangible asset","group":"Reading the business","definition":"Physical assets you can touch and value, such as equipment, inventory, and real estate. Buyers care because these assets provide collateral for your loan, contribute to the business's liquidation value, and are essential for operations.","url":"https://dealroom.so/glossary/tangible-asset","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"useful-life","term":"Useful life","group":"Reading the business","definition":"The estimated period an asset is expected to be functional and productive for the business. Buyers care because it impacts depreciation, future capital expenditures, and the overall long-term value and operational efficiency of the assets you're acquiring.","url":"https://dealroom.so/glossary/useful-life","official_sources":[],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"compliance","term":"Compliance","group":"People and paperwork","definition":"Adhering to all relevant laws, regulations, and internal policies governing the business. Buyers care deeply because non-compliance can lead to significant fines, legal liabilities, operational shutdowns, and damage to the business's reputation.","url":"https://dealroom.so/glossary/compliance","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"profit-and-loss-statement","term":"Profit and Loss Statement","group":"Reading the business","definition":"A financial report summarizing a business's revenues, expenses, and net profit or loss over a specific period. Buyers care because it’s a primary tool to understand historical profitability and the business’s ability to generate cash.","url":"https://dealroom.so/glossary/profit-and-loss-statement","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"}]},{"slug":"balance-sheet","term":"Balance Sheet","group":"Reading the business","definition":"A snapshot of a business's assets, liabilities, and owner's equity at a specific point in time. Buyers care because it reveals the company's financial health, what it owns, what it owes, and its net worth.","url":"https://dealroom.so/glossary/balance-sheet","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"assets","url":"https://dealroom.so/glossary/assets"}]},{"slug":"audit-trail","term":"Audit trail","group":"Reading the business","definition":"A chronological record of financial transactions that allows for verification of their accuracy and legitimacy. Buyers care because a strong audit trail proves the reliability of financial statements and significantly reduces the risk of fraud or misrepresentation.","url":"https://dealroom.so/glossary/audit-trail","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"market-analysis","term":"Market analysis","group":"Reading the business","definition":"A study of the target market, including its size, trends, competition, and customer base. Buyers care because it validates the business's growth potential and helps you understand external risks and opportunities.","url":"https://dealroom.so/glossary/market-analysis","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"start-up","term":"Start-up","group":"Reading the business","definition":"A newly formed business with no operating history or established revenue stream. Buyers care because SBA 7(a) loans are generally much harder to secure for startups compared to acquiring an established business due to higher inherent risk.","url":"https://dealroom.so/glossary/start-up","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"capital-contribution","term":"Capital Contribution","aka":"Equity injection","group":"Your money in the deal","definition":"This is the cash you put into the deal yourself, distinct from the SBA loan. Lenders want to see you have skin in the game, demonstrating your commitment to the business.","url":"https://dealroom.so/glossary/capital-contribution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"bank-statement","term":"Bank Statement","group":"People and paperwork","definition":"A monthly summary of activity in your bank account. Lenders use these to verify your personal liquidity and the source of your capital contribution for the loan.","url":"https://dealroom.so/glossary/bank-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"brokerage-statement","url":"https://dealroom.so/glossary/brokerage-statement"}]},{"slug":"brokerage-statement","term":"Brokerage Statement","aka":"Investment statement","group":"People and paperwork","definition":"A periodic report from your investment firm detailing your assets, transactions, and account balances. Lenders use these to verify your personal liquidity and the source of your capital contribution.","url":"https://dealroom.so/glossary/brokerage-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"seasoning-of-funds","term":"Seasoning of Funds","aka":"Seasoned funds","group":"Your money in the deal","definition":"This refers to how long your capital contribution has been held in your bank or investment accounts. Lenders require funds to be 'seasoned' to ensure they aren't borrowed money disguised as equity.","url":"https://dealroom.so/glossary/seasoning-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"}]},{"slug":"overall-leverage","term":"Overall Leverage","group":"Reading the business","definition":"This measures the total debt a business or buyer carries relative to its equity or assets. High leverage means more risk for lenders, impacting your loan terms and approval.","url":"https://dealroom.so/glossary/overall-leverage","official_sources":[],"related":[{"slug":"debt-to-income-ratio","url":"https://dealroom.so/glossary/debt-to-income-ratio"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"debt-to-income-ratio","term":"Debt-to-Income Ratio","aka":"DTI","group":"Reading the business","definition":"This ratio compares your total monthly debt payments to your gross monthly income. Lenders use it to gauge your ability to manage monthly payments, including the new business debt.","url":"https://dealroom.so/glossary/debt-to-income-ratio","official_sources":[],"related":[{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"security-interest","term":"Security Interest","group":"Doing the deal","definition":"A legal right granted by a borrower to a lender over specific assets to secure a loan. If you default, the lender can seize and sell these assets to recover their money.","url":"https://dealroom.so/glossary/security-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"liquidation-value","term":"Liquidation Value","group":"Reading the business","definition":"This is the estimated price an asset or business would fetch if sold quickly, often under distressed conditions. It's usually much lower than fair market value or going concern value.","url":"https://dealroom.so/glossary/liquidation-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"lien-search","term":"Lien Search","aka":"UCC search","group":"Doing the deal","definition":"A process to discover any existing legal claims (liens) against a business's assets or your personal assets. It ensures the collateral offered for the loan is clear of prior claims.","url":"https://dealroom.so/glossary/lien-search","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"foreclosure","term":"Foreclosure","group":"Doing the deal","definition":"The legal process by which a lender repossesses and sells property (like real estate or business assets) when a borrower defaults on their loan.","url":"https://dealroom.so/glossary/foreclosure","official_sources":[],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"commitment-letter","term":"Commitment Letter","aka":"Loan commitment","group":"Doing the deal","definition":"A formal document from the lender outlining the terms and conditions under which they will provide financing for your business acquisition. It's a conditional approval for your loan.","url":"https://dealroom.so/glossary/commitment-letter","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"non-delegated-lender","term":"Non-Delegated Lender","group":"People and paperwork","definition":"A lender that must send all their SBA loan applications directly to the SBA for review and final approval. This process typically takes longer than with a delegated lender.","url":"https://dealroom.so/glossary/non-delegated-lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"pyramid-scheme","term":"Pyramid Scheme","group":"The loan itself","definition":"An illegal business model where participants profit primarily from recruiting new members, not from selling legitimate products or services. The SBA will not finance these businesses.","url":"https://dealroom.so/glossary/pyramid-scheme","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"multi-level-marketing-company","url":"https://dealroom.so/glossary/multi-level-marketing-company"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"multi-level-marketing-company","term":"Multi-Level Marketing Company","aka":"MLM","group":"The loan itself","definition":"A business model where participants sell products and also earn commissions from sales made by people they recruit. While often legal, the SBA has specific rules for financing them.","url":"https://dealroom.so/glossary/multi-level-marketing-company","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"not-engaged-in-lending-rule","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"chapter-7-bankruptcy","term":"Chapter 7 bankruptcy","group":"People and paperwork","definition":"This is a type of bankruptcy where a business or individual's assets are liquidated to pay off debts. For a buyer, recent personal or business bankruptcy can impact loan eligibility.","url":"https://dealroom.so/glossary/chapter-7-bankruptcy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"fair-market-value","term":"Fair market value","group":"Reading the business","definition":"This is the estimated price an asset or business would sell for in an open and competitive market between a willing buyer and seller. It's crucial for determining if you're paying a reasonable price.","url":"https://dealroom.so/glossary/fair-market-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"debarred-from-federal-programs","term":"Debarred from federal programs","group":"People and paperwork","definition":"This means an individual or entity is prohibited from participating in federal contracts or receiving federal financial assistance due to past misconduct. It's an automatic disqualifier for an SBA loan.","url":"https://dealroom.so/glossary/debarred-from-federal-programs","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"conflict-of-interest","term":"Conflict of interest","group":"People and paperwork","definition":"This arises when a person's private interests could improperly influence their official duties or decisions. In a deal, it can affect fairness and transparency.","url":"https://dealroom.so/glossary/conflict-of-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"partnership","term":"Partnership","group":"People and paperwork","definition":"A business structure where two or more individuals share ownership, profits, and liabilities. Understanding its implications for your liability is essential.","url":"https://dealroom.so/glossary/partnership","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"corporation","term":"Corporation","group":"People and paperwork","definition":"A legal entity separate from its owners, providing liability protection. This structure affects how the business is bought and your personal risk.","url":"https://dealroom.so/glossary/corporation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"llc","term":"LLC","aka":"Limited Liability Company","group":"People and paperwork","definition":"A business structure that combines the liability protection of a corporation with the pass-through taxation of a partnership or sole proprietorship. It's a common and flexible choice for buyers.","url":"https://dealroom.so/glossary/llc","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"}]},{"slug":"lease-agreement","term":"Lease agreement","group":"Doing the deal","definition":"A contract outlining the terms under which one party agrees to rent property owned by another. This defines your occupancy costs and security.","url":"https://dealroom.so/glossary/lease-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"}]},{"slug":"refinancing","term":"Refinancing","group":"The loan itself","definition":"Replacing an existing loan with a new one, often to get better terms or lower payments. For SBA, this typically refers to refinancing existing business debt.","url":"https://dealroom.so/glossary/refinancing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"personal-liquidity","term":"Personal liquidity","group":"Your money in the deal","definition":"The amount of cash and easily convertible assets you have readily available. Lenders assess this to ensure you can cover your equity injection and post-closing working capital.","url":"https://dealroom.so/glossary/personal-liquidity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"seasonal-business","term":"Seasonal business","group":"Reading the business","definition":"A business whose revenues and expenses fluctuate significantly based on seasons or specific times of the year. This impacts cash flow and repayment capacity.","url":"https://dealroom.so/glossary/seasonal-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"preferred-lender","term":"Preferred Lender","group":"People and paperwork","definition":"A bank authorized by the SBA to make final credit decisions on SBA loans without prior SBA review. This speeds up the loan approval process.","url":"https://dealroom.so/glossary/preferred-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"non-delegated-lender","url":"https://dealroom.so/glossary/non-delegated-lender"}]},{"slug":"principal-and-interest","term":"Principal and interest","group":"The loan itself","definition":"These are the two main components of your loan payments. Principal reduces the loan balance, while interest is the cost of borrowing.","url":"https://dealroom.so/glossary/principal-and-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"life-insurance","term":"Life insurance","group":"Doing the deal","definition":"A policy that pays a sum of money to beneficiaries upon the insured person's death. For SBA loans, it protects the lender in case of the borrower's death.","url":"https://dealroom.so/glossary/life-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"fraud-allegation","term":"Fraud allegation","group":"People and paperwork","definition":"A claim that someone intentionally deceived another for personal gain. If proven, it can lead to serious legal consequences for the involved parties.","url":"https://dealroom.so/glossary/fraud-allegation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"nondisclosure","url":"https://dealroom.so/glossary/nondisclosure"},{"slug":"non-compliance","url":"https://dealroom.so/glossary/non-compliance"}]},{"slug":"nondisclosure","term":"Nondisclosure","group":"People and paperwork","definition":"Failure to reveal important information that could influence a decision or transaction. In a business sale, this can be as damaging as outright misrepresentation.","url":"https://dealroom.so/glossary/nondisclosure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"disclosure-document","url":"https://dealroom.so/glossary/disclosure-document"}]},{"slug":"misrepresentation","term":"Misrepresentation","group":"People and paperwork","definition":"A false statement of fact made by one party to another, which induces the other party to enter into a contract. This can be intentional or unintentional.","url":"https://dealroom.so/glossary/misrepresentation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud-allegation","url":"https://dealroom.so/glossary/fraud-allegation"},{"slug":"nondisclosure","url":"https://dealroom.so/glossary/nondisclosure"},{"slug":"disclosure-document","url":"https://dealroom.so/glossary/disclosure-document"},{"slug":"non-compliance","url":"https://dealroom.so/glossary/non-compliance"}]},{"slug":"personal-judgment","term":"Personal judgment","group":"People and paperwork","definition":"A court order declaring that one person owes another person money. This can significantly impact an individual's creditworthiness and ability to secure a loan.","url":"https://dealroom.so/glossary/personal-judgment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"tax-lien","url":"https://dealroom.so/glossary/tax-lien"}]},{"slug":"down-payment","term":"Down payment","group":"Your money in the deal","definition":"The portion of the business purchase price you pay upfront in cash, not financed by the loan. This demonstrates your commitment and reduces the lender's risk.","url":"https://dealroom.so/glossary/down-payment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"disclosure-document","term":"Disclosure document","group":"People and paperwork","definition":"Any document provided by the seller that reveals material information about the business. These are crucial for your due diligence.","url":"https://dealroom.so/glossary/disclosure-document","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"nondisclosure","url":"https://dealroom.so/glossary/nondisclosure"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"}]},{"slug":"non-compliance","term":"Non-compliance","group":"People and paperwork","definition":"Failure to adhere to applicable laws, regulations, or contractual obligations. This can result in fines, penalties, or legal action against the business.","url":"https://dealroom.so/glossary/non-compliance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"fraud-allegation","url":"https://dealroom.so/glossary/fraud-allegation"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"tax-lien","url":"https://dealroom.so/glossary/tax-lien"}]},{"slug":"non-cash-asset","term":"Non-cash asset","group":"Reading the business","definition":"Any asset that is not readily convertible into cash, such as inventory, equipment, real estate, or goodwill. These are critical components of a business's value.","url":"https://dealroom.so/glossary/non-cash-asset","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"subordination","term":"Subordination","group":"Doing the deal","definition":"An agreement by which one debt or lien is ranked below another in terms of priority for repayment. The subordinated debt gets paid only after the senior debt is fully satisfied.","url":"https://dealroom.so/glossary/subordination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-standby-agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"}]},{"slug":"retirement-account","term":"Retirement account","group":"Your money in the deal","definition":"A savings plan that provides financial benefits in retirement, often with tax advantages. These accounts can sometimes be used to fund a business acquisition.","url":"https://dealroom.so/glossary/retirement-account","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ira","url":"https://dealroom.so/glossary/ira"},{"slug":"401k","url":"https://dealroom.so/glossary/401k"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"ira","term":"IRA","group":"Your money in the deal","definition":"A tax-advantaged individual retirement account. Funds from an IRA can potentially be used for an equity injection into your business acquisition, usually through a ROBS structure.","url":"https://dealroom.so/glossary/ira","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"retirement-account","url":"https://dealroom.so/glossary/retirement-account"},{"slug":"401k","url":"https://dealroom.so/glossary/401k"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"c-corporation","url":"https://dealroom.so/glossary/c-corporation"}]},{"slug":"401k","term":"401k","group":"Your money in the deal","definition":"An employer-sponsored retirement plan that allows employees to save and invest for retirement on a tax-deferred basis. Like an IRA, it can be a source of funds for a business purchase via a ROBS.","url":"https://dealroom.so/glossary/401k","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"retirement-account","url":"https://dealroom.so/glossary/retirement-account"},{"slug":"ira","url":"https://dealroom.so/glossary/ira"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"c-corporation","url":"https://dealroom.so/glossary/c-corporation"}]},{"slug":"c-corporation","term":"C-Corporation","group":"People and paperwork","definition":"A legal business structure that is separate from its owners, offering liability protection. It is taxed separately from its owners, leading to potential \"double taxation.\"","url":"https://dealroom.so/glossary/c-corporation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"}]},{"slug":"tax-lien","term":"Tax lien","group":"Doing the deal","definition":"A legal claim placed on assets by a government agency (like the IRS) to secure payment of unpaid taxes. This lien must typically be resolved before an SBA loan can close.","url":"https://dealroom.so/glossary/tax-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"judgment","term":"Judgment","group":"People and paperwork","definition":"A formal court decision stating one party owes another money or has violated a contract. For a buyer, this is a red flag on a seller's credit or the business's past legal issues.","url":"https://dealroom.so/glossary/judgment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"litigation","url":"https://dealroom.so/glossary/litigation"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"}]},{"slug":"payment-plan","term":"Payment plan","group":"The loan itself","definition":"A structured agreement to repay a debt over time, typically in regular installments. For your SBA loan, this outlines your monthly principal and interest obligations.","url":"https://dealroom.so/glossary/payment-plan","official_sources":[],"related":[{"slug":"installment-agreement","url":"https://dealroom.so/glossary/installment-agreement"},{"slug":"principal","url":"https://dealroom.so/glossary/principal"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"installment-agreement","term":"Installment agreement","group":"The loan itself","definition":"An arrangement to make regular, periodic payments to satisfy a debt. This describes how you'll pay back your SBA 7(a) loan over its term.","url":"https://dealroom.so/glossary/installment-agreement","official_sources":[],"related":[{"slug":"payment-plan","url":"https://dealroom.so/glossary/payment-plan"},{"slug":"principal","url":"https://dealroom.so/glossary/principal"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"disbursement","term":"Disbursement","group":"Doing the deal","definition":"The act of paying out funds. In an SBA loan, this is when the lender releases the approved loan money to you or directly to the seller/other parties for deal expenses.","url":"https://dealroom.so/glossary/disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"closing-condition","term":"Closing condition","group":"Doing the deal","definition":"Requirements that must be met by specific parties before a deal can be finalized. These protect you by ensuring the business is as represented before you transfer funds.","url":"https://dealroom.so/glossary/closing-condition","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"indemnification-agreement","url":"https://dealroom.so/glossary/indemnification-agreement"},{"slug":"legal-opinion","url":"https://dealroom.so/glossary/legal-opinion"}]},{"slug":"legal-opinion","term":"Legal opinion","group":"People and paperwork","definition":"A formal letter from an attorney, often confirming specific legal matters related to the business or transaction. Lenders typically require these to confirm the deal's legality and enforceability.","url":"https://dealroom.so/glossary/legal-opinion","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"},{"slug":"indemnification-agreement","url":"https://dealroom.so/glossary/indemnification-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"indemnification-agreement","term":"Indemnification agreement","group":"Doing the deal","definition":"A contract where one party agrees to compensate another for certain losses or damages. This protects you from financial repercussions caused by issues arising from the seller's period of ownership.","url":"https://dealroom.so/glossary/indemnification-agreement","official_sources":[],"related":[{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"litigation","url":"https://dealroom.so/glossary/litigation"}]},{"slug":"reserve","term":"Reserve","group":"Reading the business","definition":"Funds set aside for future unexpected expenses, liabilities, or a specific purpose. You need to understand a business's reserves to assess its financial health and capacity to handle unforeseen costs.","url":"https://dealroom.so/glossary/reserve","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"litigation","term":"Litigation","group":"People and paperwork","definition":"The process of taking legal action, typically a lawsuit. Any ongoing or past litigation against the business or seller is a serious risk that needs thorough investigation.","url":"https://dealroom.so/glossary/litigation","official_sources":[],"related":[{"slug":"judgment","url":"https://dealroom.so/glossary/judgment"},{"slug":"legal-opinion","url":"https://dealroom.so/glossary/legal-opinion"},{"slug":"indemnification-agreement","url":"https://dealroom.so/glossary/indemnification-agreement"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"franchisor","term":"Franchisor","group":"People and paperwork","definition":"The company that grants the right to operate a franchise business using its brand, system, and trademarks. You'll deal directly with them if you're buying a franchised business.","url":"https://dealroom.so/glossary/franchisor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"title-insurance","term":"Title insurance","group":"Doing the deal","definition":"An insurance policy protecting lenders and property owners against financial loss from defects in a property's title. If real estate is involved, this is crucial to ensure clear ownership.","url":"https://dealroom.so/glossary/title-insurance","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"closing-condition","url":"https://dealroom.so/glossary/closing-condition"}]},{"slug":"principal","term":"Principal","group":"The loan itself","definition":"The original amount of money borrowed, or the portion of a loan that remains unpaid, excluding interest. This is the core amount you actually borrowed for the business acquisition.","url":"https://dealroom.so/glossary/principal","official_sources":[],"related":[{"slug":"outstanding-principal","url":"https://dealroom.so/glossary/outstanding-principal"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"payment-plan","url":"https://dealroom.so/glossary/payment-plan"}]},{"slug":"outstanding-principal","term":"Outstanding principal","group":"The loan itself","definition":"The remaining amount of the original loan balance that still needs to be repaid, not including accrued interest. This is the current remaining balance of your SBA loan.","url":"https://dealroom.so/glossary/outstanding-principal","official_sources":[],"related":[{"slug":"principal","url":"https://dealroom.so/glossary/principal"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"payment-plan","url":"https://dealroom.so/glossary/payment-plan"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"subsidiary","term":"Subsidiary","group":"People and paperwork","definition":"A company controlled by another company, often called the parent company. When buying a business, understand if it's a subsidiary and how that affects its operations or liabilities.","url":"https://dealroom.so/glossary/subsidiary","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"consolidated-entity","term":"Consolidated Entity","group":"Reading the business","definition":"When an entity controls another, their financials are combined for reporting. This gives you a complete picture of the overall financial health and interconnectedness, crucial for assessing the true value of the business you're buying.","url":"https://dealroom.so/glossary/consolidated-entity","official_sources":[],"related":[{"slug":"capital-structure","url":"https://dealroom.so/glossary/capital-structure"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"primary-industry","term":"Primary Industry","group":"Reading the business","definition":"This is the main business activity, identified by a NAICS code. It determines if the business meets SBA size standards and eligibility rules, which is critical for securing a 7(a) loan.","url":"https://dealroom.so/glossary/primary-industry","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"affiliate","term":"Affiliate","group":"People and paperwork","definition":"An affiliate is a business or person connected to the borrower or seller, often through ownership, management, or contractual relationships. The SBA considers affiliates when determining size standards and eligibility for a 7(a) loan.","url":"https://dealroom.so/glossary/affiliate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"unconditional-gift","term":"Unconditional Gift","group":"Your money in the deal","definition":"This is money received from an immediate family member without any expectation of repayment or future consideration. It can be used as part of your equity injection for an SBA 7(a) loan, provided it's properly documented.","url":"https://dealroom.so/glossary/unconditional-gift","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"capital-structure","term":"Capital Structure","group":"Reading the business","definition":"This refers to how a business finances its operations and growth through debt and equity. Understanding it shows you the existing financial leverage and how your 7(a) loan will fit in.","url":"https://dealroom.so/glossary/capital-structure","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"overfinancing","term":"Overfinancing","group":"The loan itself","definition":"This occurs when a loan amount exceeds the actual needs of the business or its fair market value. The SBA strictly prohibits overfinancing, as it can lead to unnecessary debt and higher risk of default.","url":"https://dealroom.so/glossary/overfinancing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-proceeds","url":"https://dealroom.so/glossary/loan-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"loan-proceeds","term":"Loan Proceeds","group":"The loan itself","definition":"These are the actual funds disbursed by the lender from your SBA 7(a) loan. They are strictly regulated and must be used for approved purposes outlined in the loan authorization.","url":"https://dealroom.so/glossary/loan-proceeds","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"overfinancing","url":"https://dealroom.so/glossary/overfinancing"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"blended-loan-term","term":"Blended Loan Term","group":"The loan itself","definition":"This is the weighted-average maturity when a single 7(a) loan finances multiple assets with different maximum terms, like real estate (25 years) and business acquisition/working capital (10 years). It impacts your monthly payment.","url":"https://dealroom.so/glossary/blended-loan-term","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"personal-collateral","term":"Personal Collateral","group":"Doing the deal","definition":"This refers to personal assets, such as your home or investment accounts, that you pledge to secure the SBA loan. It provides the lender with additional security beyond the business assets.","url":"https://dealroom.so/glossary/personal-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"primary-residence","url":"https://dealroom.so/glossary/primary-residence"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"primary-residence","term":"Primary Residence","group":"Doing the deal","definition":"This is the home where you permanently live. For an SBA loan, if there's a collateral shortfall, your primary residence may be pledged as personal collateral, usually with a second mortgage.","url":"https://dealroom.so/glossary/primary-residence","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-collateral","url":"https://dealroom.so/glossary/personal-collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"second-mortgage","url":"https://dealroom.so/glossary/second-mortgage"}]},{"slug":"collateral-coverage","term":"Collateral Coverage","group":"Doing the deal","definition":"This is the extent to which the value of pledged assets covers the loan amount. Lenders want to see strong collateral coverage to minimize their risk if the business defaults.","url":"https://dealroom.so/glossary/collateral-coverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-collateral","url":"https://dealroom.so/glossary/personal-collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"community-property-state","term":"Community Property State","group":"People and paperwork","definition":"These are states where marital assets acquired during marriage are considered jointly owned by both spouses. If you live in one, your spouse will likely need to sign a personal guarantee or a spousal consent form for an SBA loan.","url":"https://dealroom.so/glossary/community-property-state","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"community-property","url":"https://dealroom.so/glossary/community-property"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"community-property","term":"Community Property","group":"People and paperwork","definition":"Assets (and debts) acquired by either spouse during marriage in a community property state are considered jointly owned. This affects what collateral can be pledged for an SBA loan and who must sign the guaranty.","url":"https://dealroom.so/glossary/community-property","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"community-property-state","url":"https://dealroom.so/glossary/community-property-state"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"deed-of-trust","term":"Deed of Trust","group":"Doing the deal","definition":"This is a legal document used in some states to secure a real estate loan, similar to a mortgage. It grants a trustee the power to sell the property if the borrower defaults.","url":"https://dealroom.so/glossary/deed-of-trust","official_sources":[],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"personal-collateral","url":"https://dealroom.so/glossary/personal-collateral"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"delinquency","term":"Delinquency","group":"The loan itself","definition":"This is when a borrower misses a loan payment. For a buyer, understanding the seller's past delinquencies on business debts is crucial, as it indicates repayment capacity and financial health.","url":"https://dealroom.so/glossary/delinquency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"conditional-approval","term":"Conditional approval","group":"Doing the deal","definition":"This means your SBA loan application is approved, but only if you meet specific outstanding conditions. As a buyer, your deal isn't final until all conditions are satisfied.","url":"https://dealroom.so/glossary/conditional-approval","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"net-profit","term":"Net profit","group":"Reading the business","definition":"This is what's left of a business's revenue after all expenses, including taxes, are paid. It's a key indicator of a business's true profitability and financial health for a buyer.","url":"https://dealroom.so/glossary/net-profit","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"material-adverse-change","term":"Material adverse change","group":"Doing the deal","definition":"This is a significant negative event or change affecting the business between the time you sign the LOI and closing. As a buyer, it gives you grounds to renegotiate or walk away from the deal.","url":"https://dealroom.so/glossary/material-adverse-change","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"risk-assessment","term":"Risk assessment","group":"Reading the business","definition":"This is the process of identifying and evaluating potential threats to a business's financial stability or operational success. For a buyer, it's critical to understand what could go wrong before you buy.","url":"https://dealroom.so/glossary/risk-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"cost-of-capital","term":"Cost of capital","group":"Reading the business","definition":"This is the total cost a business pays to finance its operations, including interest on debt and returns to equity investors. For a buyer, it impacts the overall profitability and financial structure of the acquisition.","url":"https://dealroom.so/glossary/cost-of-capital","official_sources":[],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"risk-adjusted-interest-rate","term":"Risk-adjusted interest rate","group":"The loan itself","definition":"This is the interest rate a lender charges, factoring in the perceived risk of the borrower and the business. Higher risk generally means a higher interest rate for the buyer.","url":"https://dealroom.so/glossary/risk-adjusted-interest-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"}]},{"slug":"over-leveraging","term":"Over-leveraging","group":"Reading the business","definition":"This occurs when a business takes on too much debt relative to its cash flow or assets, making it difficult to meet repayment obligations. For a buyer, it can lead to financial distress and even bankruptcy.","url":"https://dealroom.so/glossary/over-leveraging","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"}]},{"slug":"escrow-account","term":"Escrow account","group":"Doing the deal","definition":"This is a temporary account held by a neutral third party to hold funds or documents until specific conditions of a transaction are met. As a buyer, it protects your interests during the closing process.","url":"https://dealroom.so/glossary/escrow-account","official_sources":[],"related":[{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"subordination-agreement","url":"https://dealroom.so/glossary/subordination-agreement"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"creditor","term":"Creditor","group":"People and paperwork","definition":"This is an individual or entity to whom money is owed. As a buyer, you need to identify all business creditors during due diligence to understand existing liabilities.","url":"https://dealroom.so/glossary/creditor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"subordination-agreement","url":"https://dealroom.so/glossary/subordination-agreement"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"subordination-agreement","term":"Subordination agreement","group":"Doing the deal","definition":"This is a legal document where one creditor agrees to take a lower priority position than another in the event of default. For an SBA loan, the seller note almost always needs to be subordinated.","url":"https://dealroom.so/glossary/subordination-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-standby-agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"}]},{"slug":"intellectual-property","term":"Intellectual property","group":"Reading the business","definition":"These are intangible assets like patents, trademarks, copyrights, and trade secrets that a business owns. For a buyer, IP can be a significant source of value and competitive advantage.","url":"https://dealroom.so/glossary/intellectual-property","official_sources":[],"related":[{"slug":"trademark","url":"https://dealroom.so/glossary/trademark"},{"slug":"patent","url":"https://dealroom.so/glossary/patent"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"trademark","term":"Trademark","group":"Reading the business","definition":"This is a recognizable sign, design, or expression that identifies products or services of a particular source from those of others. For a buyer, a strong trademark builds brand recognition and customer loyalty.","url":"https://dealroom.so/glossary/trademark","official_sources":[],"related":[{"slug":"intellectual-property","url":"https://dealroom.so/glossary/intellectual-property"},{"slug":"patent","url":"https://dealroom.so/glossary/patent"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"patent","term":"Patent","group":"Reading the business","definition":"This is a government-granted right to an inventor to exclude others from making, using, or selling an invention for a set period. For a buyer, patents can provide a significant competitive moat and protect proprietary technology.","url":"https://dealroom.so/glossary/patent","official_sources":[],"related":[{"slug":"intellectual-property","url":"https://dealroom.so/glossary/intellectual-property"},{"slug":"trademark","url":"https://dealroom.so/glossary/trademark"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"copyright","term":"Copyright","group":"Reading the business","definition":"A legal protection for original creative works. Buyers care because it can protect a business's unique content, software, or marketing materials, adding value and competitive advantage.","url":"https://dealroom.so/glossary/copyright","official_sources":[],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"legal-counsel","term":"Legal counsel","aka":"Attorney","group":"People and paperwork","definition":"An attorney or law firm providing legal advice and representation. A buyer needs their own legal counsel to review deal documents, protect their interests, and ensure a smooth transaction.","url":"https://dealroom.so/glossary/legal-counsel","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"advisory-board","term":"Advisory board","group":"People and paperwork","definition":"A group of external experts offering non-binding strategic advice to a company's management. Buyers might form or inherit one to gain insights and guidance on business operations or growth.","url":"https://dealroom.so/glossary/advisory-board","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"stock","term":"Stock","aka":"Shares","group":"Reading the business","definition":"Represents ownership shares in a corporation. In an acquisition, a buyer might purchase the seller's stock, acquiring the entire corporate entity, including its assets and liabilities.","url":"https://dealroom.so/glossary/stock","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"controlling-interest","url":"https://dealroom.so/glossary/controlling-interest"}]},{"slug":"bond","term":"Bond","aka":"Debt security","group":"Reading the business","definition":"A debt instrument where an investor loans money to an entity (corporate or government) for a defined period at a fixed interest rate. In small business acquisitions, bonds are rarely a primary asset or liability you'd encounter.","url":"https://dealroom.so/glossary/bond","official_sources":[],"related":[{"slug":"liquid-asset","url":"https://dealroom.so/glossary/liquid-asset"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"liquid-asset","term":"Liquid asset","group":"Reading the business","definition":"An asset that can be quickly converted into cash with minimal loss in value. Buyers look for strong liquid assets like cash and marketable securities to ensure the business has operating capital and financial stability.","url":"https://dealroom.so/glossary/liquid-asset","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"environmental-liability","term":"Environmental liability","group":"Reading the business","definition":"A legal or financial obligation arising from past or present environmental damage or non-compliance. Buyers must identify these to avoid inheriting costly cleanups, fines, or legal actions.","url":"https://dealroom.so/glossary/environmental-liability","official_sources":[],"related":[{"slug":"environmental-contamination","url":"https://dealroom.so/glossary/environmental-contamination"},{"slug":"environmental-due-diligence","url":"https://dealroom.so/glossary/environmental-due-diligence"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"environmental-contamination","term":"Environmental contamination","aka":"Contamination","group":"Reading the business","definition":"The presence of hazardous substances in the environment, like soil or water, above natural background levels. This is a red flag for buyers, signaling potential significant cleanup costs and regulatory issues.","url":"https://dealroom.so/glossary/environmental-contamination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-liability","url":"https://dealroom.so/glossary/environmental-liability"},{"slug":"environmental-due-diligence","url":"https://dealroom.so/glossary/environmental-due-diligence"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"environmental-due-diligence","term":"Environmental due diligence","group":"Doing the deal","definition":"The process of evaluating a property or business for potential environmental risks and liabilities. Buyers must conduct this to identify contamination, regulatory non-compliance, and associated costs before closing.","url":"https://dealroom.so/glossary/environmental-due-diligence","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-liability","url":"https://dealroom.so/glossary/environmental-liability"},{"slug":"environmental-contamination","url":"https://dealroom.so/glossary/environmental-contamination"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"consulting-agreement","term":"Consulting agreement","aka":"Consulting contract","group":"Doing the deal","definition":"A contract for advisory or professional services provided by an individual or firm. Buyers often negotiate a consulting agreement with the seller post-closing for a transition period.","url":"https://dealroom.so/glossary/consulting-agreement","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"}]},{"slug":"employment-agreement","term":"Employment agreement","aka":"Employment contract","group":"People and paperwork","definition":"A contract between an employer and an employee outlining terms of employment, compensation, and responsibilities. Buyers review these for key employees to understand obligations and ensure continuity post-acquisition.","url":"https://dealroom.so/glossary/employment-agreement","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"de-facto-control","term":"De facto control","aka":"Actual control","group":"Reading the business","definition":"Exercising actual, practical control over a business despite not holding a majority ownership stake. Buyers should be aware of this dynamic, as it can influence decision-making and business operations.","url":"https://dealroom.so/glossary/de-facto-control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"controlling-interest","url":"https://dealroom.so/glossary/controlling-interest"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"franchise-fee","term":"Franchise fee","group":"Doing the deal","definition":"A payment made by a franchisee to a franchisor for the right to operate a franchised business. Buyers of a franchise will incur this fee, either upfront or ongoing, as part of the total project costs.","url":"https://dealroom.so/glossary/franchise-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"}]},{"slug":"controlling-interest","term":"Controlling interest","aka":"Majority ownership","group":"Reading the business","definition":"Ownership of enough shares or voting power to dictate a company's policies and management. For an SBA loan, the buyer typically needs to acquire at least 51% of the business to demonstrate control.","url":"https://dealroom.so/glossary/controlling-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"de-facto-control","url":"https://dealroom.so/glossary/de-facto-control"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"minority-ownership","term":"Minority Ownership","group":"Reading the business","definition":"This means owning less than 50% of a business. It's crucial because an SBA loan requires individuals or entities with 20% or more ownership to personally guarantee the loan.","url":"https://dealroom.so/glossary/minority-ownership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"equity-position","url":"https://dealroom.so/glossary/equity-position"},{"slug":"legal-entity-structure","url":"https://dealroom.so/glossary/legal-entity-structure"}]},{"slug":"legal-entity-structure","term":"Legal Entity Structure","group":"People and paperwork","definition":"This is how a business is legally organized (e.g., LLC, corporation, sole proprietorship). It impacts liability, taxes, and how the business can be bought or sold.","url":"https://dealroom.so/glossary/legal-entity-structure","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"re-underwriting","term":"Re-underwriting","group":"The loan itself","definition":"This is when a lender re-evaluates your loan application, typically due to significant changes in your financial situation or the deal terms. It means the loan approval isn't final until all conditions are met.","url":"https://dealroom.so/glossary/re-underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"transition-and-training-period","term":"Transition and Training Period","group":"Doing the deal","definition":"This is the agreed-upon time post-closing where the seller helps you learn the business operations. It's vital for a smooth handover and continued success.","url":"https://dealroom.so/glossary/transition-and-training-period","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"personal-assets","term":"Personal Assets","group":"Your money in the deal","definition":"These are individual possessions with monetary value, like your home, savings, or investments. Lenders assess these to evaluate your financial strength and collateral for a personal guarantee.","url":"https://dealroom.so/glossary/personal-assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"home-equity-loan","url":"https://dealroom.so/glossary/home-equity-loan"}]},{"slug":"maximum-maturity","term":"Maximum Maturity","group":"The loan itself","definition":"This is the longest allowable repayment period for an SBA loan, set by SBA rules. It dictates the maximum time you have to pay back the loan.","url":"https://dealroom.so/glossary/maximum-maturity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"repayment-schedule","url":"https://dealroom.so/glossary/repayment-schedule"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"repayment-schedule","term":"Repayment Schedule","group":"The loan itself","definition":"This details the timing and amount of your loan payments, including principal and interest, over the life of the loan. It's essential for budgeting and cash flow management.","url":"https://dealroom.so/glossary/repayment-schedule","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"tax-audit","term":"Tax Audit","group":"Reading the business","definition":"This is an examination by tax authorities to verify the accuracy of a business's tax returns. It can uncover financial discrepancies or liabilities that impact the deal.","url":"https://dealroom.so/glossary/tax-audit","official_sources":[],"related":[{"slug":"tax-liability","url":"https://dealroom.so/glossary/tax-liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"tax-liability","term":"Tax Liability","group":"Reading the business","definition":"This is the total amount of tax debt a business owes to taxing authorities. Unidentified tax liabilities can become your responsibility after acquiring a business.","url":"https://dealroom.so/glossary/tax-liability","official_sources":[],"related":[{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"unsecured-personal-loan","term":"Unsecured Personal Loan","group":"Your money in the deal","definition":"This is a loan based on your creditworthiness, not backed by collateral. It can be a source for your equity injection, but SBA rules have specific requirements.","url":"https://dealroom.so/glossary/unsecured-personal-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-assets","url":"https://dealroom.so/glossary/personal-assets"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"home-equity-loan","term":"Home Equity Loan","group":"Your money in the deal","definition":"This is a loan secured by the equity in your home. It's a common way for buyers to fund their equity injection for an SBA loan.","url":"https://dealroom.so/glossary/home-equity-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-assets","url":"https://dealroom.so/glossary/personal-assets"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"equity-position","term":"Equity Position","group":"Your money in the deal","definition":"This refers to the percentage of ownership an individual holds in a business. It determines control, profit share, and personal guarantee requirements for SBA loans.","url":"https://dealroom.so/glossary/equity-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"minority-ownership","url":"https://dealroom.so/glossary/minority-ownership"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"legal-entity-structure","url":"https://dealroom.so/glossary/legal-entity-structure"},{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"}]},{"slug":"money-laundering","term":"Money Laundering","group":"People and paperwork","definition":"This is the illegal process of concealing the origins of illegally obtained money, typically by passing it through legitimate businesses. It's a serious financial crime.","url":"https://dealroom.so/glossary/money-laundering","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"material-breach","term":"Material Breach","group":"Doing the deal","definition":"This is a significant violation of a contract's terms that undermines its entire purpose. It can allow the non-breaching party to terminate the contract and seek damages.","url":"https://dealroom.so/glossary/material-breach","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"collateral-position","term":"Collateral position","group":"The loan itself","definition":"This refers to the order in which lenders get paid from your business's assets if the loan defaults. A strong collateral position means the SBA lender is first in line.","url":"https://dealroom.so/glossary/collateral-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-1-statement","url":"https://dealroom.so/glossary/ucc-1-statement"}]},{"slug":"pre-closing-expenses","term":"Pre-closing expenses","group":"Doing the deal","definition":"These are costs you pay before the loan officially closes, like appraisal fees, environmental reports, or legal fees. You need to budget for these as they're often out-of-pocket.","url":"https://dealroom.so/glossary/pre-closing-expenses","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"transaction-costs","url":"https://dealroom.so/glossary/transaction-costs"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"transaction-costs","term":"Transaction costs","group":"Doing the deal","definition":"These are all the fees and expenses associated with buying a business, beyond the purchase price itself. They include legal, accounting, appraisal, and loan-related fees.","url":"https://dealroom.so/glossary/transaction-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"pre-closing-expenses","url":"https://dealroom.so/glossary/pre-closing-expenses"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"succession-plan","term":"Succession plan","group":"Reading the business","definition":"This is a plan for how leadership and key roles will be transferred when the current owner leaves. For buyers, it shows how smoothly the business can continue without the seller.","url":"https://dealroom.so/glossary/succession-plan","official_sources":[],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"operating-expense","term":"Operating expense","group":"Reading the business","definition":"These are the costs a business incurs to run its day-to-day operations, like rent, salaries, utilities, and supplies. They directly impact profitability and cash flow.","url":"https://dealroom.so/glossary/operating-expense","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"security-deposit","term":"Security deposit","group":"Doing the deal","definition":"This is an amount of money held by a landlord or other party as assurance against future damage or non-payment. For a business, it's often for the lease.","url":"https://dealroom.so/glossary/security-deposit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"pre-closing-expenses","url":"https://dealroom.so/glossary/pre-closing-expenses"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"fixed-assets","term":"Fixed assets","group":"Reading the business","definition":"These are long-term tangible assets a business owns and uses to generate income, like property, plant, and equipment. They are not intended for sale in the ordinary course of business.","url":"https://dealroom.so/glossary/fixed-assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"}]},{"slug":"general-intangibles","term":"General intangibles","group":"Reading the business","definition":"This is a broad legal term for certain non-physical assets of a business that have value, like customer lists, trademarks, or software. They are often part of collateral for an SBA loan.","url":"https://dealroom.so/glossary/general-intangibles","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"customer-list","url":"https://dealroom.so/glossary/customer-list"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"ucc-1-statement","url":"https://dealroom.so/glossary/ucc-1-statement"}]},{"slug":"ucc-1-statement","term":"UCC-1 statement","group":"People and paperwork","definition":"This is a public notice filed by a lender to legally claim a security interest in a borrower's assets. It establishes the lender's priority if the borrower defaults.","url":"https://dealroom.so/glossary/ucc-1-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral-position","url":"https://dealroom.so/glossary/collateral-position"}]},{"slug":"customer-list","term":"Customer list","group":"Reading the business","definition":"This is a record of a business's past and current customers, including their contact information and purchase history. It's a key intangible asset showing the business's revenue potential.","url":"https://dealroom.so/glossary/customer-list","official_sources":[],"related":[{"slug":"general-intangibles","url":"https://dealroom.so/glossary/general-intangibles"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"guarantor","term":"Guarantor","group":"People and paperwork","definition":"A guarantor is someone who promises to repay a loan if the primary borrower defaults. For an SBA loan, all owners with 20% or more equity are typically required to be guarantors.","url":"https://dealroom.so/glossary/guarantor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"assumption","term":"Assumption","group":"Doing the deal","definition":"This refers to taking over an existing obligation or contract from the seller, like a lease or a debt. It means you become responsible for its terms.","url":"https://dealroom.so/glossary/assumption","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"non-standby-debt","term":"Non-standby debt","group":"The loan itself","definition":"This is debt owed by the business or its owners that does not need to be subordinated to the SBA loan. It can be repaid normally, unlike standby debt.","url":"https://dealroom.so/glossary/non-standby-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"}]},{"slug":"personal-bankruptcy","term":"Personal bankruptcy","group":"People and paperwork","definition":"This is a legal process where an individual seeks to eliminate or reorganize their debts. It significantly impacts your creditworthiness and ability to get an SBA loan.","url":"https://dealroom.so/glossary/personal-bankruptcy","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"financial-statements","term":"Financial statements","group":"Reading the business","definition":"These are the core documents (P&L, Balance Sheet, Cash Flow Statement) that show a business's past financial performance. You need them to understand profitability and health.","url":"https://dealroom.so/glossary/financial-statements","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"loan-underwriting","term":"Loan underwriting","group":"The loan itself","definition":"This is the lender's process of evaluating your application and the business to decide if they'll approve the loan and under what terms. It's where they assess risk.","url":"https://dealroom.so/glossary/loan-underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"risk-profile","url":"https://dealroom.so/glossary/risk-profile"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"independent-valuation","term":"Independent valuation","group":"Reading the business","definition":"A professional appraiser's objective assessment of a business's fair market value. Lenders require this to ensure the purchase price is reasonable for the assets and cash flow.","url":"https://dealroom.so/glossary/independent-valuation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"startup-costs","term":"Startup costs","group":"Your money in the deal","definition":"These are the initial expenses required to get a new business, or a newly acquired one, operational. For an acquisition, they often include working capital, initial inventory, and build-out expenses.","url":"https://dealroom.so/glossary/startup-costs","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"build-out","url":"https://dealroom.so/glossary/build-out"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"build-out","term":"Build-out","group":"Doing the deal","definition":"Refers to the construction or renovation of a commercial space to make it suitable for your business operations. This is common for businesses moving to new premises or significantly upgrading existing ones.","url":"https://dealroom.so/glossary/build-out","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"startup-costs","url":"https://dealroom.so/glossary/startup-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"interest-rate","term":"Interest rate","group":"The loan itself","definition":"The cost of borrowing money, expressed as a percentage of the principal. This directly impacts your monthly loan payments and the total cost of your 7(a) loan.","url":"https://dealroom.so/glossary/interest-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"risk-profile","term":"Risk profile","group":"The loan itself","definition":"An assessment of the potential for loss a lender faces when extending credit to you and the business. Lenders evaluate this to determine loan eligibility and terms.","url":"https://dealroom.so/glossary/risk-profile","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-underwriting","url":"https://dealroom.so/glossary/loan-underwriting"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"maximum-loan-size","term":"Maximum loan size","group":"The loan itself","definition":"The largest amount of money the SBA will guarantee for a single 7(a) loan. This sets the upper limit for your acquisition financing.","url":"https://dealroom.so/glossary/maximum-loan-size","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"tiered-prepayment-penalty","term":"Tiered prepayment penalty","group":"The loan itself","definition":"A fee charged by the lender if you pay off a substantial portion of your loan early, typically within the first few years. It's designed to compensate the lender for lost interest income.","url":"https://dealroom.so/glossary/tiered-prepayment-penalty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"prepayment-penalty","url":"https://dealroom.so/glossary/prepayment-penalty"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"refinancing","url":"https://dealroom.so/glossary/refinancing"}]},{"slug":"inherited-funds","term":"Inherited funds","group":"Your money in the deal","definition":"Money received from an estate or as a gift, which can be used for your equity injection in an SBA loan. These funds must be properly documented.","url":"https://dealroom.so/glossary/inherited-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"source-of-funds","url":"https://dealroom.so/glossary/source-of-funds"}]},{"slug":"sweat-equity","term":"Sweat equity","group":"Your money in the deal","definition":"Non-cash contributions to a business, such as the value of your labor, expertise, or intellectual property. The SBA generally does not allow this to count towards your equity injection.","url":"https://dealroom.so/glossary/sweat-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"source-of-funds","url":"https://dealroom.so/glossary/source-of-funds"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"risk-mitigation","term":"Risk mitigation","group":"Reading the business","definition":"Strategies and actions taken to reduce the likelihood or impact of potential problems for the business. Lenders look for this to protect their investment.","url":"https://dealroom.so/glossary/risk-mitigation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"risk-profile","url":"https://dealroom.so/glossary/risk-profile"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"debt-obligation","term":"Debt obligation","group":"The loan itself","definition":"The legal duty to repay borrowed money. This includes the principal and interest on all loans, both business and personal.","url":"https://dealroom.so/glossary/debt-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"source-of-funds","term":"Source of funds","group":"Your money in the deal","definition":"Where your cash for the equity injection (down payment) is coming from. The SBA requires clear documentation for all funds used.","url":"https://dealroom.so/glossary/source-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"}]},{"slug":"internal-valuation","term":"Internal valuation","group":"Reading the business","definition":"A valuation performed by the buyer or their advisor using available financial data. Buyers care because it helps them determine a fair offer price and understand the business's worth independent of the seller's asking price.","url":"https://dealroom.so/glossary/internal-valuation","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"owner-s-salary","term":"Owner's salary","group":"Reading the business","definition":"The compensation an owner takes from the business for their work. Buyers care because this amount needs to be adjusted when evaluating the business's true profitability for a new owner.","url":"https://dealroom.so/glossary/owner-s-salary","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"draw","term":"Draw","group":"Reading the business","definition":"Money taken out of a business by its owner, often for personal use, especially in partnerships or sole proprietorships. Buyers care because it directly reduces the business's available cash and needs to be accounted for when analyzing profitability.","url":"https://dealroom.so/glossary/draw","official_sources":[],"related":[{"slug":"owner-s-salary","url":"https://dealroom.so/glossary/owner-s-salary"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"first-lien-position","term":"First lien position","group":"The loan itself","definition":"This means your SBA lender has the primary claim on specific business assets if the loan defaults, ahead of all other creditors. Buyers care because it's a standard requirement for an SBA loan, securing the lender's interest.","url":"https://dealroom.so/glossary/first-lien-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"}]},{"slug":"purchase-agreement","term":"Purchase agreement","group":"Doing the deal","definition":"The legally binding contract detailing all terms and conditions of a business acquisition, signed by both buyer and seller. Buyers care because this document dictates exactly what you're buying, for how much, and under what conditions.","url":"https://dealroom.so/glossary/purchase-agreement","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"franchise-unit","term":"Franchise unit","group":"Reading the business","definition":"An individual location or business operation that is part of a larger franchise system. Buyers care because buying a franchise unit means operating under an established brand with specific rules and support, but also ongoing fees and restrictions.","url":"https://dealroom.so/glossary/franchise-unit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"ineligible-business","url":"https://dealroom.so/glossary/ineligible-business"}]},{"slug":"ongoing-service-fee","term":"Ongoing service fee","group":"Doing the deal","definition":"A recurring charge from the SBA to the lender, which the lender typically passes on to the borrower, for the life of the loan. Buyers care because this fee adds to the total cost of your SBA loan, increasing your monthly payments.","url":"https://dealroom.so/glossary/ongoing-service-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"arm-s-length-lease-agreement","term":"Arm's-length lease agreement","group":"Doing the deal","definition":"A lease negotiated independently between two unrelated parties, ensuring fair market terms without preferential treatment. Buyers care because the SBA requires this if you're leasing property from the seller or a related entity, ensuring the rent is legitimate and market-based.","url":"https://dealroom.so/glossary/arm-s-length-lease-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"}]},{"slug":"loan-authorization","term":"Loan authorization","group":"The loan itself","definition":"The official document from the SBA to your lender, approving the loan and outlining all the specific terms, conditions, and requirements. Buyers care because it's the definitive legal document governing your SBA loan, detailing everything you must comply with.","url":"https://dealroom.so/glossary/loan-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"ineligible-business","term":"Ineligible business","group":"The loan itself","definition":"A type of business that the SBA will not provide a loan guarantee for, due to specific rules or restrictions. Buyers care because trying to acquire an ineligible business with an SBA loan is a non-starter, wasting your time and resources.","url":"https://dealroom.so/glossary/ineligible-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"franchise-unit","url":"https://dealroom.so/glossary/franchise-unit"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"}]},{"slug":"character-evaluation","term":"Character evaluation","group":"People and paperwork","definition":"The SBA's assessment of the buyer's (and other key principals') integrity and trustworthiness, based on credit history and background checks. Buyers care because a poor character evaluation can disqualify you from an SBA loan, regardless of the business's strength.","url":"https://dealroom.so/glossary/character-evaluation","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"environmental-assessment","term":"Environmental assessment","group":"Reading the business","definition":"A study to identify potential environmental contamination or hazards on a property, typically a Phase I ESA. Buyers care because the SBA requires this for certain properties, and contamination can create significant liabilities and costs for the new owner.","url":"https://dealroom.so/glossary/environmental-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"co-operative","term":"Co-operative","group":"People and paperwork","definition":"A business owned and operated by its members for their mutual benefit, rather than for profit alone. Buyers care because while some co-operatives are eligible for SBA loans, their unique ownership and operational structure can impact financing and management.","url":"https://dealroom.so/glossary/co-operative","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-business","url":"https://dealroom.so/glossary/ineligible-business"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"leverage","term":"Leverage","group":"Reading the business","definition":"Using borrowed money (debt) to finance an investment, aiming to magnify the potential returns on your equity. Buyers care because an SBA loan is a form of leverage, allowing you to acquire a larger business than you could with just your personal cash.","url":"https://dealroom.so/glossary/leverage","official_sources":[],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"}]},{"slug":"licensing-and-regulatory-requirements","term":"Licensing and Regulatory Requirements","group":"People and paperwork","definition":"These are the permits and rules your business needs to operate legally. You must understand them to avoid legal issues and ensure the business can continue after you buy it.","url":"https://dealroom.so/glossary/licensing-and-regulatory-requirements","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"prepaid-rent","term":"Prepaid Rent","group":"Reading the business","definition":"This is rent paid in advance for a future period. It's an asset on the balance sheet, representing a future expense already covered.","url":"https://dealroom.so/glossary/prepaid-rent","official_sources":[],"related":[{"slug":"lease-payment","url":"https://dealroom.so/glossary/lease-payment"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"insurance-premium","term":"Insurance Premium","group":"Reading the business","definition":"This is the periodic payment for an insurance policy, covering risks like property damage, liability, or health. It's a recurring operating expense for the business.","url":"https://dealroom.so/glossary/insurance-premium","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"soft-costs","term":"Soft Costs","group":"Doing the deal","definition":"These are non-physical expenses in a project or acquisition, like legal, accounting, and consulting fees. They add to the total project cost but aren't tangible assets.","url":"https://dealroom.so/glossary/soft-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"consulting-fee","url":"https://dealroom.so/glossary/consulting-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"contingent-seller-financing","term":"Contingent Seller Financing","aka":"Earnout, Performance-based seller note","group":"Your money in the deal","definition":"This is a seller note where repayment is tied to the future performance of the business. If the business doesn't meet specific targets, the seller may not get paid.","url":"https://dealroom.so/glossary/contingent-seller-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-standby-agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"}]},{"slug":"loan-disbursement","term":"Loan Disbursement","aka":"Funding","group":"The loan itself","definition":"This is when the lender releases the loan funds to the borrower or third parties for the approved Use of Proceeds. It's the moment the loan actually funds.","url":"https://dealroom.so/glossary/loan-disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"startup-acquisition","term":"Startup Acquisition","group":"Doing the deal","definition":"This refers to buying a business that is very new, often without a long operating history or established revenue streams. It carries higher risk than buying a mature business.","url":"https://dealroom.so/glossary/startup-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"start-up","url":"https://dealroom.so/glossary/start-up"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"accrued-interest","term":"Accrued Interest","group":"The loan itself","definition":"This is the interest that has accumulated on a loan but has not yet been paid. It grows over time, even if payments aren't due immediately.","url":"https://dealroom.so/glossary/accrued-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"}]},{"slug":"consulting-fee","term":"Consulting Fee","group":"Doing the deal","definition":"This is the payment for professional advice or services from an expert. In an acquisition, it often covers M&A advisors, business brokers, or other specialists.","url":"https://dealroom.so/glossary/consulting-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"soft-costs","url":"https://dealroom.so/glossary/soft-costs"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"lease-payment","term":"Lease Payment","aka":"Rent","group":"Reading the business","definition":"This is the regular payment made by a tenant to a landlord for the right to use property. It's a significant recurring operating expense for many businesses.","url":"https://dealroom.so/glossary/lease-payment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"prepaid-rent","url":"https://dealroom.so/glossary/prepaid-rent"}]},{"slug":"fair-market-wage","term":"Fair Market Wage","aka":"Market rate salary","group":"Reading the business","definition":"This is the typical compensation paid for a specific job in a particular market, reflecting what a similar position would earn.","url":"https://dealroom.so/glossary/fair-market-wage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"identifiable-intangible-asset","term":"Identifiable Intangible Asset","group":"Reading the business","definition":"This is a non-physical asset that can be separated from the business or arises from contractual/legal rights, like patents, trademarks, or customer lists.","url":"https://dealroom.so/glossary/identifiable-intangible-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"asset-approach","term":"Asset Approach","aka":"Cost approach","group":"Reading the business","definition":"This is a business valuation method that determines value by summing the fair market value of a business's assets and subtracting its liabilities.","url":"https://dealroom.so/glossary/asset-approach","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"income-approach","url":"https://dealroom.so/glossary/income-approach"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"income-approach","term":"Income Approach","aka":"Discounted cash flow, Capitalization of earnings","group":"Reading the business","definition":"This is a business valuation method that estimates value based on the business's expected future income or cash flow. It's widely used for operating businesses.","url":"https://dealroom.so/glossary/income-approach","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"asset-approach","url":"https://dealroom.so/glossary/asset-approach"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"market-approach","term":"Market approach","group":"Reading the business","definition":"This valuation method estimates a business's worth by comparing it to similar businesses that have recently sold. As a buyer, it provides a crucial reality check on the asking price against real-world transactions.","url":"https://dealroom.so/glossary/market-approach","official_sources":[],"related":[{"slug":"valuation-report","url":"https://dealroom.so/glossary/valuation-report"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"valuation-report","term":"Valuation report","group":"Reading the business","definition":"A formal document from an independent appraiser that estimates the fair market value of the business you intend to buy. For an SBA loan, it's often a mandatory document to justify the purchase price.","url":"https://dealroom.so/glossary/valuation-report","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"market-approach","url":"https://dealroom.so/glossary/market-approach"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"rental-income","term":"Rental income","group":"Reading the business","definition":"Money a business receives from leasing out property or equipment it owns to another party. Buyers must determine if this income is stable and truly part of the core business being acquired, or if it's from a separate asset.","url":"https://dealroom.so/glossary/rental-income","official_sources":[],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"current-asset","term":"Current asset","group":"Reading the business","definition":"An asset expected to be converted into cash, used up, or sold within one year, such as cash, accounts receivable, or inventory. Buyers examine current assets to understand a business's short-term liquidity and ongoing working capital needs.","url":"https://dealroom.so/glossary/current-asset","official_sources":[],"related":[{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"customer-concentration","term":"Customer concentration","group":"Reading the business","definition":"When a large percentage of a business's revenue relies on a small number of customers. For buyers, high customer concentration is a significant risk, as losing even one major customer can severely disrupt cash flow.","url":"https://dealroom.so/glossary/customer-concentration","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"servicing-issue","term":"Servicing issue","group":"The loan itself","definition":"A problem related to the administration, payments, or compliance with terms of a loan after it has closed. Buyers care because these issues can lead to unexpected costs, penalties, or even loan default.","url":"https://dealroom.so/glossary/servicing-issue","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"co-mingled","term":"Co-mingled","group":"People and paperwork","definition":"Describes when personal and business funds or assets are mixed together, making it impossible to distinguish them. This is a major red flag for buyers and lenders as it obscures the true financial health of the business.","url":"https://dealroom.so/glossary/co-mingled","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"non-community-property-state","term":"Non-community property state","group":"People and paperwork","definition":"A state where assets acquired during marriage are generally considered the separate property of each spouse, unless specifically titled jointly. This distinction significantly impacts how a lender assesses available collateral and who must provide a personal guarantee.","url":"https://dealroom.so/glossary/non-community-property-state","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"marital-property-laws","url":"https://dealroom.so/glossary/marital-property-laws"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"marital-property-laws","term":"Marital property laws","group":"People and paperwork","definition":"State-specific rules dictating how assets and debts are owned and divided between spouses during marriage or divorce. These laws are critical in determining what assets can be used as collateral and who must guarantee an SBA loan.","url":"https://dealroom.so/glossary/marital-property-laws","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"non-community-property-state","url":"https://dealroom.so/glossary/non-community-property-state"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"personal-foreclosure","term":"Personal foreclosure","group":"People and paperwork","definition":"The legal process where a lender seizes and sells an individual's property, typically a home, due to unpaid debt. A past personal foreclosure is a severe derogatory mark that can significantly impact your creditworthiness for an SBA loan.","url":"https://dealroom.so/glossary/personal-foreclosure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"mitigating-factors","url":"https://dealroom.so/glossary/mitigating-factors"},{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"}]},{"slug":"short-sale","term":"Short sale","group":"Doing the deal","definition":"The sale of a property for less than the amount owed on its mortgage, with the lender's explicit permission. A past short sale is a negative item on your credit history, signaling prior financial distress.","url":"https://dealroom.so/glossary/short-sale","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-foreclosure","url":"https://dealroom.so/glossary/personal-foreclosure"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"mitigating-factors","url":"https://dealroom.so/glossary/mitigating-factors"}]},{"slug":"mitigating-factors","term":"Mitigating factors","group":"The loan itself","definition":"Explanations or specific circumstances that reduce the severity or negative impact of past events, such as credit issues or business failures. Buyers use these to strengthen their loan application despite blemishes on their financial history.","url":"https://dealroom.so/glossary/mitigating-factors","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-foreclosure","url":"https://dealroom.so/glossary/personal-foreclosure"},{"slug":"short-sale","url":"https://dealroom.so/glossary/short-sale"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"dissolution","term":"Dissolution","group":"Doing the deal","definition":"The formal legal process of closing down a business entity, effectively ending its legal existence. As a buyer, you must ensure the seller properly dissolves the selling entity if it is not being acquired.","url":"https://dealroom.so/glossary/dissolution","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"credit-inquiry","term":"Credit inquiry","group":"People and paperwork","definition":"A record of someone checking your credit history. 'Hard' inquiries, like those for an SBA loan, can temporarily affect your credit score, while 'soft' inquiries do not. Buyers will incur hard inquiries when applying for financing.","url":"https://dealroom.so/glossary/credit-inquiry","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"underwriter","term":"Underwriter","group":"People and paperwork","definition":"The underwriter is the person at the bank who assesses your loan application and the business's financials to decide if it meets the bank's and SBA's lending standards. They determine if the loan is too risky.","url":"https://dealroom.so/glossary/underwriter","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-origination","url":"https://dealroom.so/glossary/loan-origination"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"loan-denial","url":"https://dealroom.so/glossary/loan-denial"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"loan-denial","term":"Loan denial","group":"The loan itself","definition":"A loan denial means your lender has rejected your application for an SBA 7(a) loan. This can happen for various reasons, from insufficient collateral to poor personal credit, or the business not meeting eligibility.","url":"https://dealroom.so/glossary/loan-denial","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriter","url":"https://dealroom.so/glossary/underwriter"},{"slug":"sba-7-a-loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"appraised-value","term":"Appraised value","group":"Reading the business","definition":"This is the independent expert's opinion of a business's or asset's fair market value. For an SBA loan, the appraised value helps justify the purchase price and ensure adequate collateral.","url":"https://dealroom.so/glossary/appraised-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"franchise-system","term":"Franchise system","group":"Reading the business","definition":"A franchise system is a business model where a franchisor grants a franchisee the right to operate a business using their established brand, products, and operating procedures in exchange for fees.","url":"https://dealroom.so/glossary/franchise-system","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchisee","url":"https://dealroom.so/glossary/franchisee"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"franchisee","term":"Franchisee","group":"People and paperwork","definition":"A franchisee is the individual or entity that purchases the right to operate a business under the established brand and system of a franchisor. You would be the franchisee if buying an existing franchise.","url":"https://dealroom.so/glossary/franchisee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise-system","url":"https://dealroom.so/glossary/franchise-system"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"sba-7-a-loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"application-fee","term":"Application fee","group":"The loan itself","definition":"An application fee is a charge by some lenders for processing your loan application. 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It's a percentage of the guaranteed amount.","url":"https://dealroom.so/glossary/sba-guaranty-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"sba-7-a-loan","url":"https://dealroom.so/glossary/sba-7-a-loan"}]},{"slug":"authorization-date","term":"Authorization date","group":"The loan itself","definition":"This is the date the SBA officially approves and authorizes your 7(a) loan. It marks a critical milestone, confirming the SBA's commitment to guarantee the specified loan amount.","url":"https://dealroom.so/glossary/authorization-date","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"sba-7-a-loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"loan-origination","url":"https://dealroom.so/glossary/loan-origination"}]},{"slug":"sba-7-a-loan","term":"SBA 7(a) loan","group":"The loan itself","definition":"This is the primary SBA loan program used by small businesses, including those buying an existing business. The SBA guarantees a portion of the loan, reducing risk for lenders and making capital more accessible.","url":"https://dealroom.so/glossary/sba-7-a-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"loan-origination","term":"Loan origination","group":"Doing the deal","definition":"Loan origination is the entire process from when you first apply for a loan until the funds are disbursed. 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It's a key indicator of financial health and your ability to repay a loan.","url":"https://dealroom.so/glossary/profitability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"eligibility-criteria","term":"Eligibility Criteria","group":"The loan itself","definition":"These are the rules a borrower and business must meet to qualify for an SBA 7(a) loan. If you or the business don't meet them, you won't get the loan.","url":"https://dealroom.so/glossary/eligibility-criteria","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-term","url":"https://dealroom.so/glossary/loan-term"},{"slug":"collateral-requirements","url":"https://dealroom.so/glossary/collateral-requirements"},{"slug":"participating-lender","url":"https://dealroom.so/glossary/participating-lender"},{"slug":"credit-decision","url":"https://dealroom.so/glossary/credit-decision"}]},{"slug":"financial-statement","term":"Financial Statement","group":"Reading the business","definition":"These are formal records of a business's financial activities, like Profit & Loss statements and Balance Sheets. They show you the historical performance and health of the business.","url":"https://dealroom.so/glossary/financial-statement","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"aggregate-loan-amount","term":"Aggregate Loan Amount","group":"The loan itself","definition":"This is the total principal amount of all outstanding SBA 7(a) loans you or your affiliates have. The SBA has a maximum limit per borrower.","url":"https://dealroom.so/glossary/aggregate-loan-amount","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"loan-term","url":"https://dealroom.so/glossary/loan-term"}]},{"slug":"guaranteed-portion","term":"Guaranteed Portion","aka":"SBA Guaranty","group":"The loan itself","definition":"This is the percentage of your SBA 7(a) loan that the SBA promises to repay the lender if you default. It reduces the lender's risk, making them more willing to lend.","url":"https://dealroom.so/glossary/guaranteed-portion","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"participating-lender","url":"https://dealroom.so/glossary/participating-lender"},{"slug":"collateral-requirements","url":"https://dealroom.so/glossary/collateral-requirements"}]},{"slug":"loan-term","term":"Loan Term","aka":"Term / Maturity","group":"The loan itself","definition":"This is the length of time you have to repay the loan. A longer term means lower monthly payments but more interest paid over time.","url":"https://dealroom.so/glossary/loan-term","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"real-estate","term":"Real Estate","aka":"Owner-occupied commercial real estate","group":"Reading the business","definition":"This refers to land and buildings. 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If you default, the lender can seize and sell these assets to recover their money.","url":"https://dealroom.so/glossary/collateral-requirements","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"business-asset","url":"https://dealroom.so/glossary/business-asset"},{"slug":"personal-asset","url":"https://dealroom.so/glossary/personal-asset"},{"slug":"blanket-lien","url":"https://dealroom.so/glossary/blanket-lien"}]},{"slug":"business-asset","term":"Business Asset","group":"Reading the business","definition":"These are items of value owned by the business, like equipment, inventory, or accounts receivable. 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They are often required as additional collateral for an SBA loan.","url":"https://dealroom.so/glossary/personal-asset","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"blanket-lien","term":"Blanket Lien","aka":"UCC Lien","group":"Doing the deal","definition":"This is a legal claim by the lender on all the business's assets, rather than just specific ones. It gives the lender broad security over the business's property.","url":"https://dealroom.so/glossary/blanket-lien","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"collateral-requirements","url":"https://dealroom.so/glossary/collateral-requirements"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"participating-lender","term":"Participating Lender","group":"People and paperwork","definition":"This is a financial institution, like a bank, authorized by the SBA to make 7(a) loans. They originate and service the loan, with the SBA guaranteeing a portion.","url":"https://dealroom.so/glossary/participating-lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"credit-decision","url":"https://dealroom.so/glossary/credit-decision"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"credit-decision","term":"Credit Decision","group":"Doing the deal","definition":"This is the lender's final determination on whether to approve your loan application. It's based on their assessment of your creditworthiness and the business's financial health.","url":"https://dealroom.so/glossary/credit-decision","official_sources":[],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"eligibility-criteria","url":"https://dealroom.so/glossary/eligibility-criteria"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"personal-investment","term":"Personal Investment","aka":"Equity Injection, Down Payment","group":"Your money in the deal","definition":"This is the amount of your own money you contribute to the deal. The SBA requires a minimum personal investment, showing your commitment and reducing the loan amount.","url":"https://dealroom.so/glossary/personal-investment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"down-payment","url":"https://dealroom.so/glossary/down-payment"}]},{"slug":"mutual-fund","term":"Mutual Fund","group":"Your money in the deal","definition":"This is an investment vehicle that pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities.","url":"https://dealroom.so/glossary/mutual-fund","official_sources":[],"related":[{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"brokerage-statement","url":"https://dealroom.so/glossary/brokerage-statement"},{"slug":"personal-asset","url":"https://dealroom.so/glossary/personal-asset"}]},{"slug":"purchase-price","term":"Purchase price","group":"Doing the deal","definition":"This is the total amount you pay to acquire the business. It's the core number around which your entire deal structure, including your loan and equity injection, is built.","url":"https://dealroom.so/glossary/purchase-price","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"gifted-funds","term":"Gifted funds","group":"Your money in the deal","definition":"Money given to you by an immediate family member without expectation of repayment, used as part of your equity injection for an SBA loan. This helps you meet the required down payment.","url":"https://dealroom.so/glossary/gifted-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"ownership-interest","term":"Ownership interest","group":"People and paperwork","definition":"This is the percentage or share you hold in the business, which determines your control and share of profits. For SBA loans, your personal ownership stake is a critical factor.","url":"https://dealroom.so/glossary/ownership-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"retirement-account-funds","term":"Retirement account funds","group":"Your money in the deal","definition":"Money held in your 401(k), IRA, or other qualified retirement plans. These funds can sometimes be used as equity for your business purchase.","url":"https://dealroom.so/glossary/retirement-account-funds","official_sources":[],"related":[{"slug":"rollover","url":"https://dealroom.so/glossary/rollover"},{"slug":"self-directed-ira","url":"https://dealroom.so/glossary/self-directed-ira"},{"slug":"rollovers-for-business-start-ups-plan","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups-plan"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"}]},{"slug":"rollover","term":"Rollover","group":"Your money in the deal","definition":"The process of moving funds from one retirement account to another without incurring immediate taxes or penalties. This is a common way to access retirement funds for your business acquisition.","url":"https://dealroom.so/glossary/rollover","official_sources":[],"related":[{"slug":"retirement-account-funds","url":"https://dealroom.so/glossary/retirement-account-funds"},{"slug":"self-directed-ira","url":"https://dealroom.so/glossary/self-directed-ira"},{"slug":"rollovers-for-business-start-ups-plan","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups-plan"},{"slug":"irs-regulations","url":"https://dealroom.so/glossary/irs-regulations"}]},{"slug":"self-directed-ira","term":"Self-directed IRA","group":"Your money in the deal","definition":"An Individual Retirement Account that allows you to invest in a wider range of assets, including private businesses, beyond typical stocks and bonds. It's a way to use retirement funds for your equity injection.","url":"https://dealroom.so/glossary/self-directed-ira","official_sources":[],"related":[{"slug":"retirement-account-funds","url":"https://dealroom.so/glossary/retirement-account-funds"},{"slug":"rollover","url":"https://dealroom.so/glossary/rollover"},{"slug":"rollovers-for-business-start-ups-plan","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups-plan"},{"slug":"irs-regulations","url":"https://dealroom.so/glossary/irs-regulations"}]},{"slug":"tax-implication","term":"Tax implication","group":"Reading the business","definition":"The potential tax consequences of a business decision or transaction. Understanding these is crucial because they directly impact your profitability and cash flow after the acquisition.","url":"https://dealroom.so/glossary/tax-implication","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"retirement-account-funds","url":"https://dealroom.so/glossary/retirement-account-funds"}]},{"slug":"rollovers-for-business-start-ups-plan","term":"Rollovers for Business Start-ups plan","aka":"ROBS plan","group":"Your money in the deal","definition":"A specific strategy that allows you to use your 401(k) or other qualified retirement funds as equity for your business without incurring immediate taxes or penalties. It involves establishing a C-corporation.","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups-plan","official_sources":[],"related":[{"slug":"retirement-account-funds","url":"https://dealroom.so/glossary/retirement-account-funds"},{"slug":"rollover","url":"https://dealroom.so/glossary/rollover"},{"slug":"self-directed-ira","url":"https://dealroom.so/glossary/self-directed-ira"},{"slug":"irs-regulations","url":"https://dealroom.so/glossary/irs-regulations"}]},{"slug":"irs-regulations","term":"IRS regulations","aka":"Internal Revenue Service regulations","group":"People and paperwork","definition":"Rules and guidelines set by the Internal Revenue Service governing federal tax laws. You must comply with these when structuring your deal and operating your business to avoid penalties.","url":"https://dealroom.so/glossary/irs-regulations","official_sources":[],"related":[{"slug":"tax-implication","url":"https://dealroom.so/glossary/tax-implication"},{"slug":"rollovers-for-business-start-ups-plan","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups-plan"},{"slug":"self-directed-ira","url":"https://dealroom.so/glossary/self-directed-ira"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"financial-stability","term":"Financial stability","group":"Reading the business","definition":"The ability of a business to consistently meet its financial obligations and withstand economic downturns. This is a key indicator of a healthy business and its capacity to repay an SBA loan.","url":"https://dealroom.so/glossary/financial-stability","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"credit-quality","term":"Credit quality","group":"Reading the business","definition":"An assessment of a borrower's or business's ability and willingness to repay debt. Lenders evaluate this through your personal credit score and the business's financial health.","url":"https://dealroom.so/glossary/credit-quality","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"financial-stability","url":"https://dealroom.so/glossary/financial-stability"}]},{"slug":"subordinated-creditor","term":"Subordinated creditor","group":"People and paperwork","definition":"A lender or individual whose claim to repayment is ranked below other creditors. For SBA loans, this often applies to sellers who provide a seller note.","url":"https://dealroom.so/glossary/subordinated-creditor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"legal-title-transfer","term":"Legal title transfer","aka":"Change of ownership","group":"Doing the deal","definition":"The official process of moving ownership of assets or property from the seller to the buyer. This formalizes your acquisition of the business.","url":"https://dealroom.so/glossary/legal-title-transfer","official_sources":[],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"}]},{"slug":"environmental-review","term":"Environmental review","group":"Reading the business","definition":"An assessment to identify potential environmental contamination or risks associated with the business property. This protects you from future liability and is often required by the SBA.","url":"https://dealroom.so/glossary/environmental-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"hazardous-material","term":"Hazardous material","group":"Reading the business","definition":"These are substances that pose a risk to health or the environment. Buyers need to know if a business has them because remediation costs can be enormous and legally binding.","url":"https://dealroom.so/glossary/hazardous-material","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"personal-real-estate","term":"Personal real estate","group":"Your money in the deal","definition":"This is property you own personally, like your home. Lenders often look to this as additional collateral if the business assets aren't enough to secure the SBA loan.","url":"https://dealroom.so/glossary/personal-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-gap","url":"https://dealroom.so/glossary/collateral-gap"},{"slug":"additional-collateral","url":"https://dealroom.so/glossary/additional-collateral"},{"slug":"second-mortgage","url":"https://dealroom.so/glossary/second-mortgage"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"}]},{"slug":"additional-collateral","term":"Additional collateral","group":"The loan itself","definition":"This is an asset, beyond the business itself, that you pledge to secure the loan. It's often required when the business assets alone don't fully cover the SBA loan amount.","url":"https://dealroom.so/glossary/additional-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-gap","url":"https://dealroom.so/glossary/collateral-gap"},{"slug":"personal-real-estate","url":"https://dealroom.so/glossary/personal-real-estate"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"collateral-gap","term":"Collateral gap","group":"The loan itself","definition":"This occurs when the liquidation value of the business assets is less than the loan amount. The SBA requires lenders to seek additional collateral to cover this shortfall.","url":"https://dealroom.so/glossary/collateral-gap","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"additional-collateral","url":"https://dealroom.so/glossary/additional-collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"title-search","term":"Title search","group":"Doing the deal","definition":"This is a check of public records to confirm legal ownership of real estate and identify any liens or encumbrances. It ensures you're buying clear title to any property included in the deal.","url":"https://dealroom.so/glossary/title-search","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"security-instrument","url":"https://dealroom.so/glossary/security-instrument"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"security-instrument","term":"Security instrument","group":"Doing the deal","definition":"This is a legal document, like a mortgage or a security agreement, that grants the lender a claim on specific assets (collateral) if you default on the loan. It's how the lender secures their investment.","url":"https://dealroom.so/glossary/security-instrument","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"}]},{"slug":"perfect-a-lien","term":"Perfect a lien","group":"Doing the deal","definition":"This is the legal process of making a lender's claim on collateral enforceable against third parties. It ensures the lender has priority over other creditors if the business defaults.","url":"https://dealroom.so/glossary/perfect-a-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"security-instrument","url":"https://dealroom.so/glossary/security-instrument"}]},{"slug":"unconditional-personal-guaranty","term":"Unconditional personal guaranty","group":"People and paperwork","definition":"This is a promise from you, the buyer, to repay the entire SBA loan if the business cannot. It's a non-negotiable requirement for all owners with 20% or more equity.","url":"https://dealroom.so/glossary/unconditional-personal-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"credit-history","term":"Credit history","group":"Reading the business","definition":"This is a record of your past borrowing and repayment behavior. Lenders scrutinize it to assess your reliability and creditworthiness for the loan.","url":"https://dealroom.so/glossary/credit-history","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"fico-small-business-scoring-service","term":"FICO Small Business Scoring Service","aka":"SBSS","group":"Reading the business","definition":"This is a proprietary credit score for small businesses, often used by SBA lenders to pre-screen loan applicants. A strong score helps you pass the initial eligibility hurdle.","url":"https://dealroom.so/glossary/fico-small-business-scoring-service","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-history","url":"https://dealroom.so/glossary/credit-history"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"sbss-score","url":"https://dealroom.so/glossary/sbss-score"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"discharge-of-bankruptcy","term":"Discharge of bankruptcy","group":"People and paperwork","definition":"This is a court order that releases a debtor from personal liability for certain debts after a bankruptcy proceeding. Lenders will examine the timing and circumstances of any past discharge.","url":"https://dealroom.so/glossary/discharge-of-bankruptcy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"discharge","url":"https://dealroom.so/glossary/discharge"},{"slug":"credit-history","url":"https://dealroom.so/glossary/credit-history"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"character-review","term":"Character review","group":"People and paperwork","definition":"This is the lender's assessment of your integrity, honesty, and trustworthiness. It's a subjective but critical part of the SBA loan approval process.","url":"https://dealroom.so/glossary/character-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"background-check","url":"https://dealroom.so/glossary/background-check"},{"slug":"credit-history","url":"https://dealroom.so/glossary/credit-history"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"background-check","term":"Background check","group":"People and paperwork","definition":"This is a review of your criminal and civil history. It's a mandatory part of the SBA loan process for all owners and key principals.","url":"https://dealroom.so/glossary/background-check","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"character-review","url":"https://dealroom.so/glossary/character-review"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"deal-restructuring","term":"Deal restructuring","group":"Doing the deal","definition":"This involves modifying the terms of an acquisition, such as price, financing, or collateral, to make it viable for both buyer and seller. It's often necessary to meet SBA lending requirements.","url":"https://dealroom.so/glossary/deal-restructuring","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"collateral-gap","url":"https://dealroom.so/glossary/collateral-gap"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"}]},{"slug":"tax-compliance","term":"Tax compliance","group":"Reading the business","definition":"Adhering to all tax laws and regulations. As a buyer, you must ensure the business has a clean tax record to avoid inheriting unknown liabilities from the seller.","url":"https://dealroom.so/glossary/tax-compliance","official_sources":[],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"internal-revenue-service","url":"https://dealroom.so/glossary/internal-revenue-service"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"repayment-plan","term":"Repayment plan","group":"The loan itself","definition":"The schedule detailing how you will pay back your SBA 7(a) loan, including principal and interest, over the loan's term. This dictates your monthly debt service and cash flow requirements.","url":"https://dealroom.so/glossary/repayment-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"principal-payment","url":"https://dealroom.so/glossary/principal-payment"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"internal-revenue-service","term":"Internal Revenue Service","group":"People and paperwork","definition":"The U.S. government agency responsible for collecting taxes and enforcing tax laws. As a buyer, you'll interact with the IRS when reviewing the seller's tax returns and managing your own post-acquisition tax obligations.","url":"https://dealroom.so/glossary/internal-revenue-service","official_sources":[],"related":[{"slug":"tax-compliance","url":"https://dealroom.so/glossary/tax-compliance"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"addendum","term":"Addendum","group":"People and paperwork","definition":"A document added to an existing contract to modify, clarify, or add new terms without rewriting the entire original agreement. You might use an addendum to adjust an LOI or purchase agreement during negotiations.","url":"https://dealroom.so/glossary/addendum","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"termination-clause","term":"Termination clause","group":"People and paperwork","definition":"A provision in a contract that outlines the conditions under which the agreement can be ended by one or both parties. This protects you by specifying scenarios where you can walk away from a deal.","url":"https://dealroom.so/glossary/termination-clause","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"}]},{"slug":"fixed-rate","term":"Fixed rate","group":"The loan itself","definition":"An interest rate that remains constant throughout the entire life of the loan. This provides predictable monthly principal and interest payments, simplifying budgeting for your business.","url":"https://dealroom.so/glossary/fixed-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"interest-rate-cap","url":"https://dealroom.so/glossary/interest-rate-cap"},{"slug":"sba-optional-peg-rate","url":"https://dealroom.so/glossary/sba-optional-peg-rate"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"sba-optional-peg-rate","term":"SBA Optional Peg Rate","group":"The loan itself","definition":"An alternative base rate that lenders can use for variable-rate SBA loans, instead of the WSJ Prime Rate or Term SOFR. It's set by the SBA and adjusts periodically, impacting your loan's interest rate.","url":"https://dealroom.so/glossary/sba-optional-peg-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"maximum-allowable-spread","term":"Maximum allowable spread","group":"The loan itself","definition":"The highest percentage a lender can add to the base rate (like Prime or SOFR) when calculating your SBA loan's interest rate. This ensures lenders don't overcharge borrowers beyond SBA limits.","url":"https://dealroom.so/glossary/maximum-allowable-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"sba-optional-peg-rate","url":"https://dealroom.so/glossary/sba-optional-peg-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"interest-rate-cap","url":"https://dealroom.so/glossary/interest-rate-cap"}]},{"slug":"interest-rate-cap","term":"Interest rate cap","group":"The loan itself","definition":"The maximum interest rate that can be charged on a variable-rate SBA loan over its lifetime. This protects you from unlimited increases in your monthly payments if market interest rates spike.","url":"https://dealroom.so/glossary/interest-rate-cap","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"fixed-rate","url":"https://dealroom.so/glossary/fixed-rate"},{"slug":"sba-optional-peg-rate","url":"https://dealroom.so/glossary/sba-optional-peg-rate"},{"slug":"maximum-allowable-spread","url":"https://dealroom.so/glossary/maximum-allowable-spread"}]},{"slug":"lender-packaging-fee","term":"Lender packaging fee","group":"The loan itself","definition":"A fee charged by some lenders or loan packagers for assisting with the SBA loan application and documentation. This is part of your total closing costs, adding to your overall deal expenses.","url":"https://dealroom.so/glossary/lender-packaging-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"closing-cost","url":"https://dealroom.so/glossary/closing-cost"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"closing-cost","term":"Closing cost","group":"Doing the deal","definition":"Various fees and expenses incurred to finalize a business acquisition, beyond the purchase price. These costs include lender fees, legal fees, and appraisal fees, which you must budget for as part of total project costs.","url":"https://dealroom.so/glossary/closing-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-packaging-fee","url":"https://dealroom.so/glossary/lender-packaging-fee"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"escrow","term":"Escrow","group":"Doing the deal","definition":"A financial arrangement where a third party holds funds or assets on behalf of two other parties until specific conditions are met. This protects both buyer and seller by ensuring funds are released only when agreed-upon terms are satisfied.","url":"https://dealroom.so/glossary/escrow","official_sources":[],"related":[{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"}]},{"slug":"brokerage-account","term":"Brokerage account","group":"Your money in the deal","definition":"An investment account held with a financial institution that allows you to buy and sell securities like stocks and bonds. Funds in your brokerage account can be used for your equity injection, provided they are seasoned.","url":"https://dealroom.so/glossary/brokerage-account","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"principal-payment","term":"Principal payment","group":"The loan itself","definition":"The portion of your loan payment that reduces the actual amount of money you borrowed, separate from the interest. 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It changes periodically, causing your loan payments to adjust.","url":"https://dealroom.so/glossary/index","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"margin","url":"https://dealroom.so/glossary/margin"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"cost-of-funds","term":"Cost of Funds","group":"The loan itself","definition":"This refers to the interest rate a bank pays to borrow money from other financial institutions or to depositors. It's a key factor in how they price your loan.","url":"https://dealroom.so/glossary/cost-of-funds","official_sources":[],"related":[{"slug":"margin","url":"https://dealroom.so/glossary/margin"},{"slug":"index","url":"https://dealroom.so/glossary/index"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"interest-payment","url":"https://dealroom.so/glossary/interest-payment"}]},{"slug":"charge-off","term":"Charge-off","group":"The loan itself","definition":"When a lender determines a loan is unlikely to be repaid, they write it off as a loss on their books. This often precedes collection efforts or a guaranty purchase.","url":"https://dealroom.so/glossary/charge-off","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"}]},{"slug":"settlement","term":"Settlement","group":"Doing the deal","definition":"This is the final stage of a transaction where all parties sign necessary documents, funds are disbursed, and ownership officially transfers. It's the closing of the deal.","url":"https://dealroom.so/glossary/settlement","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"investment-agreement","url":"https://dealroom.so/glossary/investment-agreement"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"turnaround-plan","term":"Turnaround Plan","group":"Reading the business","definition":"This is a strategic plan to revive a struggling business by identifying problems, implementing solutions, and restoring profitability. It outlines specific actions and timelines.","url":"https://dealroom.so/glossary/turnaround-plan","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"unsecured","term":"Unsecured","group":"The loan itself","definition":"This describes a loan or debt not backed by specific collateral. If you default, the lender cannot seize a particular asset to recover their money.","url":"https://dealroom.so/glossary/unsecured","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"equity-stake","term":"Equity Stake","group":"Your money in the deal","definition":"This refers to the ownership percentage you hold in the acquired business. It represents your direct investment and control.","url":"https://dealroom.so/glossary/equity-stake","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"},{"slug":"investment-agreement","url":"https://dealroom.so/glossary/investment-agreement"}]},{"slug":"investment-agreement","term":"Investment Agreement","group":"People and paperwork","definition":"This is a legal contract detailing the terms and conditions of an investment, including capital contributions, ownership percentages, and rights of the parties involved.","url":"https://dealroom.so/glossary/investment-agreement","official_sources":[],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"spousal-consent-form","term":"Spousal Consent Form","group":"People and paperwork","definition":"If your spouse has an interest in collateral pledged for the loan, such as your home, they must sign this form. It confirms their awareness and agreement to the lien on the shared asset.","url":"https://dealroom.so/glossary/spousal-consent-form","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"promissory-note","url":"https://dealroom.so/glossary/promissory-note"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"full-recourse","term":"Full Recourse","group":"The loan itself","definition":"This means the lender can pursue all personal assets of the guarantor(s) to recover the debt if the business defaults, not just the pledged collateral. It is a standard feature of SBA 7(a) loans.","url":"https://dealroom.so/glossary/full-recourse","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"valuation-gap","term":"Valuation Gap","group":"Reading the business","definition":"This is the difference between what a buyer is willing to pay and what a seller expects for a business. It commonly arises when their perceptions of value do not align.","url":"https://dealroom.so/glossary/valuation-gap","official_sources":[],"related":[{"slug":"business-appraisal","url":"https://dealroom.so/glossary/business-appraisal"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"}]},{"slug":"repayment-priority","term":"Repayment Priority","group":"The loan itself","definition":"This determines the order in which lenders get paid if a business defaults or is liquidated. SBA 7(a) loans typically secure a first lien position on business assets.","url":"https://dealroom.so/glossary/repayment-priority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"promissory-note","term":"Promissory Note","group":"People and paperwork","definition":"This is a legal document where you, as the borrower, promise to repay a specific amount of money to the lender. It outlines the agreed-upon terms, including the interest rate and repayment schedule.","url":"https://dealroom.so/glossary/promissory-note","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"business-appraisal","term":"Business Appraisal","group":"Reading the business","definition":"An objective, professional assessment of a business's fair market value. Lenders typically require this for SBA loans to justify the purchase price.","url":"https://dealroom.so/glossary/business-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"capital-improvement","term":"Capital Improvement","group":"Reading the business","definition":"These are significant additions or alterations to a business's fixed assets, such as property or equipment, that increase their value or extend their useful life, beyond routine maintenance.","url":"https://dealroom.so/glossary/capital-improvement","official_sources":[],"related":[{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"}]},{"slug":"s-corp","term":"S-Corp","group":"Reading the business","definition":"This is a type of corporation that passes corporate income, losses, deductions, and credits directly to its shareholders for federal tax purposes, thereby avoiding double taxation.","url":"https://dealroom.so/glossary/s-corp","official_sources":[],"related":[{"slug":"c-corp","url":"https://dealroom.so/glossary/c-corp"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"c-corp","term":"C-Corp","group":"Reading the business","definition":"A standard corporation structure that is taxed separately from its owners. Profits are taxed at the corporate level and again when distributed to shareholders as dividends, leading to double taxation.","url":"https://dealroom.so/glossary/c-corp","official_sources":[],"related":[{"slug":"s-corp","url":"https://dealroom.so/glossary/s-corp"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"valuation-gap","url":"https://dealroom.so/glossary/valuation-gap"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"lawful-permanent-resident","term":"Lawful Permanent Resident","aka":"Green Card holder","group":"People and paperwork","definition":"An individual granted the privilege of permanently residing in the United States. This status is a key eligibility requirement for non-U.S. citizens seeking an SBA 7(a) loan.","url":"https://dealroom.so/glossary/lawful-permanent-resident","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"arm-s-length-transaction","term":"Arm's-Length Transaction","group":"Doing the deal","definition":"A transaction where both buyer and seller act independently and in their own self-interest, without any pre-existing relationship or undue influence. 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This triggers the lender's right to take action, potentially demanding full repayment.","url":"https://dealroom.so/glossary/event-of-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"acceleration-of-debt","url":"https://dealroom.so/glossary/acceleration-of-debt"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"acceleration-of-debt","term":"Acceleration of Debt","group":"The loan itself","definition":"A clause in your loan agreement that allows the lender to demand immediate repayment of the entire outstanding loan balance if you default. It's a severe consequence of failing to meet loan terms.","url":"https://dealroom.so/glossary/acceleration-of-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"event-of-default","url":"https://dealroom.so/glossary/event-of-default"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"unencumbered-funds","term":"Unencumbered Funds","group":"Your money in the deal","definition":"Cash you contribute to the deal that is free from any liens, pledges, or other claims by third parties. The SBA requires your equity injection to come from these funds.","url":"https://dealroom.so/glossary/unencumbered-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"aml-kyc-checks","term":"AML/KYC checks","group":"People and paperwork","definition":"These are mandatory background checks performed by lenders to verify your identity and ensure you're not involved in illegal financial activities. They protect against fraud and comply with federal regulations.","url":"https://dealroom.so/glossary/aml-kyc-checks","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"criminal-offense","url":"https://dealroom.so/glossary/criminal-offense"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"stock-purchase-agreement","term":"Stock purchase agreement","group":"People and paperwork","definition":"A legal document used when you buy the ownership shares (stock) of a corporation, meaning you acquire the entire existing legal entity, including its assets and liabilities.","url":"https://dealroom.so/glossary/stock-purchase-agreement","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"going-concern","term":"Going concern","group":"Reading the business","definition":"An accounting assumption that a business will continue to operate indefinitely and not be forced to liquidate its assets. It's fundamental to how financial statements are prepared.","url":"https://dealroom.so/glossary/going-concern","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"project-cost","term":"Project cost","group":"Reading the business","definition":"The sum of all expenses required to complete your business acquisition, including the purchase price, working capital, and eligible closing costs. This total determines the size of your SBA loan.","url":"https://dealroom.so/glossary/project-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"eligible-closing-cost","url":"https://dealroom.so/glossary/eligible-closing-cost"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"eligible-closing-cost","term":"Eligible closing cost","group":"The loan itself","definition":"Specific expenses associated with finalizing your SBA loan and acquisition that can be included in the total loan amount. These reduce your out-of-pocket expenses.","url":"https://dealroom.so/glossary/eligible-closing-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"project-cost","url":"https://dealroom.so/glossary/project-cost"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"owner-occupied-real-estate","term":"Owner-occupied real estate","group":"Reading the business","definition":"Commercial property where your business operates and occupies at least 51% of the usable square footage. The SBA favors loans involving this type of real estate.","url":"https://dealroom.so/glossary/owner-occupied-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"lease-with-an-option-to-purchase","term":"Lease with an option to purchase","group":"Doing the deal","definition":"A lease agreement that includes a clause giving the tenant the right to buy the property at a predetermined price and timeframe. It provides flexibility and a path to ownership.","url":"https://dealroom.so/glossary/lease-with-an-option-to-purchase","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"owner-occupied-real-estate","url":"https://dealroom.so/glossary/owner-occupied-real-estate"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"project-cost","url":"https://dealroom.so/glossary/project-cost"}]},{"slug":"compensatory-factor","term":"Compensatory factor","group":"Reading the business","definition":"A positive aspect of your loan application or personal financial situation that can offset a minor weakness, improving your overall creditworthiness in the eyes of the lender.","url":"https://dealroom.so/glossary/compensatory-factor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"}]},{"slug":"criminal-offense","term":"Criminal offense","group":"People and paperwork","definition":"A violation of the law that can lead to legal penalties. Certain criminal offenses can disqualify you from obtaining an SBA loan.","url":"https://dealroom.so/glossary/criminal-offense","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"aml-kyc-checks","url":"https://dealroom.so/glossary/aml-kyc-checks"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"debarred-from-federal-programs","url":"https://dealroom.so/glossary/debarred-from-federal-programs"}]},{"slug":"underwriting-process","term":"Underwriting process","group":"Doing the deal","definition":"The lender's comprehensive review of your loan application, financial statements, business plan, and collateral to assess risk and determine your eligibility for an SBA loan.","url":"https://dealroom.so/glossary/underwriting-process","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"business-broker-s-opinion","term":"Business Broker's Opinion","group":"Reading the business","definition":"This is an estimate of a business's value provided by a broker, often used to set an asking price. Buyers care because it's a starting point, but rarely the final word on value.","url":"https://dealroom.so/glossary/business-broker-s-opinion","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"market-comparable","term":"Market Comparable","group":"Reading the business","definition":"These are recent sales data for similar businesses, used to estimate a target business's value. Buyers use them to check if the asking price aligns with what similar businesses actually sold for.","url":"https://dealroom.so/glossary/market-comparable","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"permissible-spread","term":"Permissible Spread","group":"The loan itself","definition":"This is the maximum interest rate a lender can charge on an SBA 7(a) loan, set by the SBA as a margin above a base rate. Buyers care because it directly impacts your monthly loan payments and total cost of borrowing.","url":"https://dealroom.so/glossary/permissible-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"loan-amount","term":"Loan Amount","group":"The loan itself","definition":"This is the total principal sum you borrow from the lender. Buyers need to understand the loan amount to determine the required equity injection and overall financing structure of the deal.","url":"https://dealroom.so/glossary/loan-amount","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"operational-expense","term":"Operational Expense","group":"Reading the business","definition":"These are the ongoing costs of running a business, such as rent, salaries, and utilities. Buyers must scrutinize operational expenses to accurately project future profitability and cash flow.","url":"https://dealroom.so/glossary/operational-expense","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"subordinate-lien","term":"Subordinate Lien","group":"Doing the deal","definition":"This is a legal claim on an asset that ranks lower than another claim in terms of priority for repayment if the borrower defaults. Buyers typically see this when a seller note is used as part of the equity injection, making it subordinate to the SBA loan.","url":"https://dealroom.so/glossary/subordinate-lien","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"senior-lien-position","url":"https://dealroom.so/glossary/senior-lien-position"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"senior-lien-position","term":"Senior Lien Position","group":"Doing the deal","definition":"This describes a legal claim on an asset that has the highest priority for repayment if the borrower defaults. For an SBA 7(a) loan, the lender always requires a senior lien position on the business assets.","url":"https://dealroom.so/glossary/senior-lien-position","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"subordinate-lien","url":"https://dealroom.so/glossary/subordinate-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"affiliated-business","term":"Affiliated Business","group":"Reading the business","definition":"This refers to another business that is controlled by or shares common ownership or management with the target business. Buyers must understand affiliation rules because they impact SBA size standards and eligibility.","url":"https://dealroom.so/glossary/affiliated-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"prohibited-transaction","term":"Prohibited Transaction","group":"People and paperwork","definition":"This is a transaction involving an ERISA-governed retirement plan (like a 401k) that is deemed illegal due to a conflict of interest. Buyers using a ROBS structure must strictly avoid these to protect their retirement funds from severe penalties.","url":"https://dealroom.so/glossary/prohibited-transaction","official_sources":[],"related":[{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"erisa-rules","url":"https://dealroom.so/glossary/erisa-rules"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"erisa-rules","term":"ERISA Rules","aka":"Employee Retirement Income Security Act","group":"People and paperwork","definition":"These are federal laws setting minimum standards for most private industry retirement and health plans. If you use a ROBS structure, you must comply with ERISA rules to avoid severe penalties.","url":"https://dealroom.so/glossary/erisa-rules","official_sources":[],"related":[{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"prohibited-transaction","url":"https://dealroom.so/glossary/prohibited-transaction"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"accrue-interest","term":"Accrue Interest","group":"The loan itself","definition":"This means interest is continuously calculated and added to the principal balance over time. Buyers need to understand how interest accrues to accurately forecast their total loan costs and repayment schedule.","url":"https://dealroom.so/glossary/accrue-interest","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"amortization-period","url":"https://dealroom.so/glossary/amortization-period"},{"slug":"loan-amount","url":"https://dealroom.so/glossary/loan-amount"}]},{"slug":"amortization-period","term":"Amortization Period","group":"The loan itself","definition":"This is the total length of time over which a loan is scheduled to be repaid through regular principal and interest payments. Buyers need to know this period as it dictates the size of monthly payments and the total interest paid.","url":"https://dealroom.so/glossary/amortization-period","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-amount","url":"https://dealroom.so/glossary/loan-amount"},{"slug":"accrue-interest","url":"https://dealroom.so/glossary/accrue-interest"}]},{"slug":"bill-of-sale","term":"Bill of Sale","group":"People and paperwork","definition":"This is a legal document that formally transfers ownership of personal property from the seller to the buyer. Buyers receive this at closing to prove they now own the business assets.","url":"https://dealroom.so/glossary/bill-of-sale","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"bridge-loan","term":"Bridge Loan","group":"The loan itself","definition":"A short-term loan used to \"bridge\" a gap in financing, often until a more permanent loan is secured. Buyers might encounter this if they need quick capital before a long-term SBA loan funds, which is rare for acquisitions.","url":"https://dealroom.so/glossary/bridge-loan","official_sources":[],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"loan-amount","url":"https://dealroom.so/glossary/loan-amount"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"capital-expenditure","term":"Capital Expenditure","group":"Reading the business","definition":"CapEx is money spent by a business to acquire or upgrade long-term assets like buildings, equipment, or machinery. It's crucial for buyers to understand past CapEx to assess the business's asset health and future investment needs.","url":"https://dealroom.so/glossary/capital-expenditure","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"cash-flow-projections","term":"Cash Flow Projections","group":"Reading the business","definition":"These are forecasts of a business's future cash inflows and outflows, showing its expected liquidity. As a buyer, your lender will require robust projections to prove the business can repay the 7(a) loan.","url":"https://dealroom.so/glossary/cash-flow-projections","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"credit-risk","url":"https://dealroom.so/glossary/credit-risk"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"certificate-of-deposit","term":"Certificate of Deposit","group":"Your money in the deal","definition":"A CD is a savings certificate with a fixed maturity date and interest rate. It's a low-risk way to hold cash, but for an SBA loan, funds in a CD might need to be \"seasoned\" or liquidated to be considered part of your equity injection.","url":"https://dealroom.so/glossary/certificate-of-deposit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"civil-lawsuit","term":"Civil Lawsuit","group":"People and paperwork","definition":"A civil lawsuit is a legal dispute between two or more parties seeking monetary damages or specific performance, not criminal penalties. Buyers must identify any ongoing or past lawsuits related to the business or seller during due diligence.","url":"https://dealroom.so/glossary/civil-lawsuit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"closing","term":"Closing","group":"Doing the deal","definition":"Closing is the final stage of an acquisition where all legal documents are signed, funds are transferred, and ownership officially changes hands. This is the moment your 7(a) loan is funded and the business becomes yours.","url":"https://dealroom.so/glossary/closing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"closing-conditions","url":"https://dealroom.so/glossary/closing-conditions"},{"slug":"deal-structure","url":"https://dealroom.so/glossary/deal-structure"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"closing-conditions","term":"Closing Conditions","group":"Doing the deal","definition":"These are specific requirements that must be satisfied by both buyer and seller before the acquisition can be finalized. They ensure all parties meet their obligations and protect against unforeseen issues.","url":"https://dealroom.so/glossary/closing-conditions","official_sources":[],"related":[{"slug":"conditions-precedent","url":"https://dealroom.so/glossary/conditions-precedent"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"closing","url":"https://dealroom.so/glossary/closing"}]},{"slug":"collateral-value","term":"Collateral Value","group":"Reading the business","definition":"This is the appraised worth of assets pledged to secure a loan. While the SBA 7(a) loan is primarily cash-flow based, lenders still assess collateral to mitigate risk in case of Default.","url":"https://dealroom.so/glossary/collateral-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"commercial-real-estate","term":"Commercial Real Estate","group":"Reading the business","definition":"This refers to property used for business purposes, such as offices, retail spaces, or industrial warehouses. If the business owns its real estate, it's often a significant asset in the deal.","url":"https://dealroom.so/glossary/commercial-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral-value","url":"https://dealroom.so/glossary/collateral-value"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"community-property-states","term":"Community Property States","group":"People and paperwork","definition":"These are states where marital assets and debts acquired during marriage are considered jointly owned by both spouses. This impacts how your lender assesses your personal financial strength and requires spousal signatures.","url":"https://dealroom.so/glossary/community-property-states","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"credit-score","url":"https://dealroom.so/glossary/credit-score"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"conditions-precedent","term":"Conditions Precedent","group":"Doing the deal","definition":"These are specific events or actions that must occur before another action (like Closing) can take place or a contract becomes binding. They protect both buyer and seller.","url":"https://dealroom.so/glossary/conditions-precedent","official_sources":[],"related":[{"slug":"closing-conditions","url":"https://dealroom.so/glossary/closing-conditions"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"closing","url":"https://dealroom.so/glossary/closing"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"credit-risk","term":"Credit Risk","group":"Reading the business","definition":"Credit risk is the potential for a borrower to fail to repay a loan according to the agreed terms. Lenders assess this risk to determine if they should approve your 7(a) loan and at what terms.","url":"https://dealroom.so/glossary/credit-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"credit-score","url":"https://dealroom.so/glossary/credit-score"},{"slug":"default","url":"https://dealroom.so/glossary/default"}]},{"slug":"credit-score","term":"Credit Score","group":"People and paperwork","definition":"A numerical rating that reflects your creditworthiness based on your personal credit history. Your personal Credit Score is a critical factor for 7(a) loan eligibility and will be reviewed by all lenders.","url":"https://dealroom.so/glossary/credit-score","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"credit-risk","url":"https://dealroom.so/glossary/credit-risk"}]},{"slug":"deal-structure","term":"Deal Structure","group":"Doing the deal","definition":"This refers to how an acquisition is legally and financially arranged, including what is being bought (assets or stock), the financing mix, and payment terms. It dictates the entire transaction.","url":"https://dealroom.so/glossary/deal-structure","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"default","term":"Default","group":"The loan itself","definition":"Default occurs when a borrower fails to meet the terms of their loan agreement, most commonly by missing payments. This is a serious event that triggers the lender's right to take action, including calling your Personal Guarantee.","url":"https://dealroom.so/glossary/default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"default-risk","term":"Default Risk","group":"Reading the business","definition":"This is the chance the business won't generate enough cash to pay its debts, including your SBA loan. As a buyer, you need to assess this carefully because you're personally guaranteeing the loan.","url":"https://dealroom.so/glossary/default-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"financial-performance","url":"https://dealroom.so/glossary/financial-performance"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"deferred-revenue","term":"Deferred Revenue","group":"Reading the business","definition":"This is money a business has already received for goods or services it hasn't yet delivered. It's a liability, not earned income, which means the business owes that value to customers in the future.","url":"https://dealroom.so/glossary/deferred-revenue","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"financial-performance","url":"https://dealroom.so/glossary/financial-performance"}]},{"slug":"disqualified-person","term":"Disqualified Person","group":"People and paperwork","definition":"This refers to individuals with certain past issues, like federal loan defaults, felonies, or fraud, that prevent them from getting an SBA loan. The SBA checks all key principals.","url":"https://dealroom.so/glossary/disqualified-person","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"distribution","term":"Distribution","group":"Reading the business","definition":"This is money paid out from a business's profits to its owners. It's distinct from salary or other compensation for work performed.","url":"https://dealroom.so/glossary/distribution","official_sources":[],"related":[{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"environmental-risk","term":"Environmental Risk","group":"Reading the business","definition":"This is the potential for environmental contamination on or near the business property, which could lead to cleanup costs or legal liabilities. It's a critical concern for real estate-heavy businesses.","url":"https://dealroom.so/glossary/environmental-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-site-assessment","url":"https://dealroom.so/glossary/environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"environmental-site-assessment","term":"Environmental Site Assessment","aka":"Phase I ESA","group":"Reading the business","definition":"This is a professional investigation of a property to identify potential environmental contamination. It's often required for deals involving real estate collateral.","url":"https://dealroom.so/glossary/environmental-site-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-risk","url":"https://dealroom.so/glossary/environmental-risk"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"}]},{"slug":"estate","term":"Estate","group":"People and paperwork","definition":"An estate refers to all the property and debts owned by a person, especially at the time of their death. If you're buying a business from a deceased owner, you'll be dealing with their estate.","url":"https://dealroom.so/glossary/estate","official_sources":[],"related":[{"slug":"estate-executor","url":"https://dealroom.so/glossary/estate-executor"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"estate-executor","term":"Estate Executor","group":"People and paperwork","definition":"This is the person legally appointed to manage the assets and liabilities of a deceased person's estate. They are responsible for carrying out the terms of the will or managing the estate according to law.","url":"https://dealroom.so/glossary/estate-executor","official_sources":[],"related":[{"slug":"estate","url":"https://dealroom.so/glossary/estate"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"fair-market-lease","term":"Fair Market Lease","group":"Reading the business","definition":"This is a lease agreement where the rent and terms are consistent with what similar properties would command in the current market. It reflects a true arm's length transaction.","url":"https://dealroom.so/glossary/fair-market-lease","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"financial-performance","term":"Financial Performance","group":"Reading the business","definition":"This refers to how well a business is doing financially, measured by its revenue, expenses, profits, and cash flow over time. It's the core of your due diligence.","url":"https://dealroom.so/glossary/financial-performance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"fixed-asset","term":"Fixed Asset","group":"Reading the business","definition":"These are long-term tangible assets like property, plant, and equipment that a business owns and uses to generate income, not for sale in the ordinary course of business.","url":"https://dealroom.so/glossary/fixed-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"fixed-rate-loan","term":"Fixed Rate Loan","group":"The loan itself","definition":"This is a loan where the interest rate remains constant for the entire term of the loan. Your monthly principal and interest payment stays the same, providing payment predictability.","url":"https://dealroom.so/glossary/fixed-rate-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"}]},{"slug":"franchise-addendum","term":"Franchise Addendum","group":"People and paperwork","definition":"If you're buying a franchise, this is an SBA-specific document that confirms the franchise agreement meets SBA eligibility rules. It's a required part of the loan application.","url":"https://dealroom.so/glossary/franchise-addendum","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"government-guarantee","term":"Government Guarantee","aka":"SBA Guaranty","group":"The loan itself","definition":"This is the SBA's promise to a lender to repay a portion of your loan if you default. It reduces the lender's risk, making them more willing to approve small business loans.","url":"https://dealroom.so/glossary/government-guarantee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"grant","term":"Grant","group":"The loan itself","definition":"A grant is money you receive from a government or organization that doesn't need to be repaid. For a business acquisition, grants are rarely available and not a primary financing source.","url":"https://dealroom.so/glossary/grant","official_sources":[],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"}]},{"slug":"holding-company","term":"Holding Company","group":"People and paperwork","definition":"A holding company is a legal entity that owns shares of other companies but doesn't produce goods or services itself. It's often used for structuring ownership and managing multiple businesses.","url":"https://dealroom.so/glossary/holding-company","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"home-based-business","term":"Home-Based Business","group":"Reading the business","definition":"A business operated primarily from the owner's residence. While common, operating a home-based business can complicate valuations and SBA loan eligibility if not properly structured.","url":"https://dealroom.so/glossary/home-based-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"homestead-exemption","term":"Homestead Exemption","group":"People and paperwork","definition":"A legal provision protecting a portion of a homeowner's primary residence from creditors in specific circumstances. It can impact how much collateral your personal real estate offers for an SBA loan.","url":"https://dealroom.so/glossary/homestead-exemption","official_sources":[],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"inheritance","term":"Inheritance","group":"Your money in the deal","definition":"Assets or money received from a deceased person. An inheritance can be a source of capital for your equity injection in an SBA 7(a) loan, but must be properly documented.","url":"https://dealroom.so/glossary/inheritance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"intercreditor-agreement","term":"Intercreditor Agreement","group":"People and paperwork","definition":"A contract between two or more creditors outlining their respective rights and priorities concerning a common borrower and shared collateral. It determines who gets paid first if the business defaults.","url":"https://dealroom.so/glossary/intercreditor-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"}]},{"slug":"investor","term":"Investor","group":"People and paperwork","definition":"An individual or entity that provides capital in exchange for an ownership stake or a return on their money. Investors can be a source of equity for your acquisition.","url":"https://dealroom.so/glossary/investor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"investor-agreement","url":"https://dealroom.so/glossary/investor-agreement"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"investor-agreement","term":"Investor Agreement","group":"People and paperwork","definition":"A legal contract between the business owner(s) and investors, detailing the terms of the investment, ownership stakes, rights, and responsibilities. It clarifies the relationship and expectations.","url":"https://dealroom.so/glossary/investor-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"investor","url":"https://dealroom.so/glossary/investor"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"layered-debt","term":"Layered Debt","group":"The loan itself","definition":"Multiple loans or financing instruments used simultaneously to fund a business, often with different priorities and terms. This can create a complex capital structure.","url":"https://dealroom.so/glossary/layered-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"intercreditor-agreement","url":"https://dealroom.so/glossary/intercreditor-agreement"}]},{"slug":"leasehold-acquisition","term":"Leasehold Acquisition","group":"Doing the deal","definition":"The process of acquiring the rights to use a property under an existing lease agreement, rather than purchasing the property outright. 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This spread is fixed for the life of the loan.","url":"https://dealroom.so/glossary/lender-spread","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"}]},{"slug":"lien-waivers","term":"Lien Waivers","group":"People and paperwork","definition":"Documents signed by contractors, subcontractors, and suppliers, waiving their right to place a lien on a property. They confirm payment has been received for services or materials.","url":"https://dealroom.so/glossary/lien-waivers","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"limited-guaranty","term":"Limited Guaranty","group":"People and paperwork","definition":"A personal guarantee that caps the guarantor's liability at a specific amount or for specific obligations, rather than covering the entire debt. It limits personal financial exposure.","url":"https://dealroom.so/glossary/limited-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"lender-recourse","url":"https://dealroom.so/glossary/lender-recourse"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"limited-liability-company","term":"Limited Liability Company","aka":"LLC","group":"People and paperwork","definition":"A business structure that protects owners from personal liability for business debts. As a buyer, you'll likely form an LLC to own the acquired business, shielding your personal assets.","url":"https://dealroom.so/glossary/limited-liability-company","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"loan-documents","url":"https://dealroom.so/glossary/loan-documents"}]},{"slug":"loan-documents","term":"Loan Documents","group":"People and paperwork","definition":"The entire set of legal agreements that define your loan terms, obligations, and the lender's rights. You must understand every clause before signing, as these are legally binding.","url":"https://dealroom.so/glossary/loan-documents","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"note","url":"https://dealroom.so/glossary/note"}]},{"slug":"loan-to-value","term":"Loan-to-Value","aka":"LTV","group":"The loan itself","definition":"A ratio comparing the loan amount to the value of an asset, typically real estate. While less common for business loans, it can apply if the deal includes significant owner-occupied commercial real estate.","url":"https://dealroom.so/glossary/loan-to-value","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"marital-assets","term":"Marital Assets","group":"People and paperwork","definition":"Property and wealth acquired during a marriage, often subject to division in divorce. Lenders care because a spouse's claim on these assets could affect your ability to repay the loan or use personal collateral.","url":"https://dealroom.so/glossary/marital-assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"maturity","term":"Maturity","aka":"Term / maturity","group":"The loan itself","definition":"The full length of time, in years, over which you are scheduled to repay the loan. A longer maturity means lower monthly payments but more total interest paid over the life of the loan.","url":"https://dealroom.so/glossary/maturity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"minority-stake","term":"Minority Stake","group":"Doing the deal","definition":"Ownership of less than 50% of a company, meaning you don't have controlling interest. For a small business acquisition, you typically want to buy 100% or a controlling majority.","url":"https://dealroom.so/glossary/minority-stake","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"net-operating-income","term":"Net Operating Income","aka":"NOI","group":"Reading the business","definition":"A measure of a business's profitability before taxes and interest, often used for real estate. For general businesses, buyers typically focus on SDE or EBITDA for valuation.","url":"https://dealroom.so/glossary/net-operating-income","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"non-compete-agreement","term":"Non-Compete Agreement","aka":"Non-compete","group":"People and paperwork","definition":"A contract preventing the seller from starting or working for a competing business for a set period within a defined geographic area. This protects your investment by ensuring the seller doesn't immediately become a rival.","url":"https://dealroom.so/glossary/non-compete-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"non-compete-payment","url":"https://dealroom.so/glossary/non-compete-payment"},{"slug":"loan-documents","url":"https://dealroom.so/glossary/loan-documents"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"non-compete-payment","term":"Non-Compete Payment","group":"Doing the deal","definition":"The portion of the purchase price specifically allocated to the seller for agreeing not to compete. This payment is typically financed as part of your SBA 7(a) loan.","url":"https://dealroom.so/glossary/non-compete-payment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"non-compete-agreement","url":"https://dealroom.so/glossary/non-compete-agreement"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"non-owner-investor","term":"Non-Owner Investor","group":"People and paperwork","definition":"Someone who invests capital in the business but does not participate in its daily management or operations. Their investment counts towards equity but doesn't qualify them as an owner-operator for SBA purposes.","url":"https://dealroom.so/glossary/non-owner-investor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"minority-stake","url":"https://dealroom.so/glossary/minority-stake"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"}]},{"slug":"opening-balance-sheet","term":"Opening Balance Sheet","group":"Reading the business","definition":"The balance sheet of the acquired business immediately after the sale, reflecting new ownership, purchase price allocation, and the new loan. It's a snapshot of the business's financial health post-acquisition.","url":"https://dealroom.so/glossary/opening-balance-sheet","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"passive-business","term":"Passive Business","group":"Reading the business","definition":"A business where the owner is not actively involved in day-to-day operations or management. The SBA generally does not lend to passive businesses, as they require owner-operators.","url":"https://dealroom.so/glossary/passive-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"patent-portfolio","term":"Patent Portfolio","group":"Reading the business","definition":"A collection of patents owned by a business, protecting its inventions and intellectual property. For certain businesses, this can be a significant asset and a source of competitive advantage.","url":"https://dealroom.so/glossary/patent-portfolio","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"payoff","term":"Payoff","group":"The loan itself","definition":"The total amount required to fully satisfy an existing loan or debt. When buying a business, you'll ensure all existing business debts are paid off at closing.","url":"https://dealroom.so/glossary/payoff","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"refinancing","url":"https://dealroom.so/glossary/refinancing"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"pending-litigation","term":"Pending Litigation","group":"People and paperwork","definition":"Lawsuits against the business or seller can create significant financial liabilities or distract from operations. Buyers need to identify any pending cases to assess risks and potential costs before closing.","url":"https://dealroom.so/glossary/pending-litigation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"personal-credit-report","term":"Personal Credit Report","group":"People and paperwork","definition":"This report details your individual credit history, including debts, payment history, and public records. Lenders use it to assess your creditworthiness and ability to manage personal finances, which is crucial for SBA loan approval.","url":"https://dealroom.so/glossary/personal-credit-report","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"personal-guaranty","term":"Personal Guaranty","aka":"Personal Guarantee","group":"People and paperwork","definition":"A promise by you, the business owner, to personally repay the SBA loan if the business defaults. This is a non-negotiable requirement for all owners with 20% or more equity in the borrowing entity.","url":"https://dealroom.so/glossary/personal-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-recourse","url":"https://dealroom.so/glossary/personal-recourse"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"personal-recourse","term":"Personal Recourse","group":"People and paperwork","definition":"This refers to the lender's right to pursue your personal assets to recover an unpaid loan amount, typically enabled by a personal guaranty. It means you are personally responsible for the debt, not just the business.","url":"https://dealroom.so/glossary/personal-recourse","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guaranty","url":"https://dealroom.so/glossary/personal-guaranty"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"}]},{"slug":"post-closing-training","term":"Post-Closing Training","group":"Doing the deal","definition":"Training provided by the seller to the buyer after the business acquisition is complete. This ensures a smooth transition of operations, customer relationships, and knowledge transfer.","url":"https://dealroom.so/glossary/post-closing-training","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"preferred-lender-status","term":"Preferred Lender Status","group":"People and paperwork","definition":"A designation granted by the SBA to experienced lenders, allowing them to make final credit decisions on most SBA loans without prior SBA review. This speeds up the loan approval process.","url":"https://dealroom.so/glossary/preferred-lender-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"non-delegated-lender","url":"https://dealroom.so/glossary/non-delegated-lender"}]},{"slug":"professional-fee","term":"Professional Fee","group":"Doing the deal","definition":"Costs incurred for services from advisors like attorneys, accountants, and brokers during the acquisition process. These are part of your total project costs for an SBA loan.","url":"https://dealroom.so/glossary/professional-fee","official_sources":[],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"pro-forma-financials","term":"Pro Forma Financials","group":"Reading the business","definition":"Financial statements that project a business's future performance based on assumptions, often adjusting historical results for anticipated changes or one-time events. Buyers use these to forecast the business's profitability under new ownership.","url":"https://dealroom.so/glossary/pro-forma-financials","official_sources":[],"related":[{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"property-tax","term":"Property Tax","group":"Reading the business","definition":"Taxes levied by local governments on real estate owned by the business. These are an ongoing operating expense that directly impacts the business's profitability and cash flow.","url":"https://dealroom.so/glossary/property-tax","official_sources":[],"related":[{"slug":"prorated-property-tax","url":"https://dealroom.so/glossary/prorated-property-tax"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"prorated-property-tax","term":"Prorated Property Tax","group":"Doing the deal","definition":"At closing, property taxes are divided between the buyer and seller based on the number of days each party owned the property in the current tax period. This ensures each pays their fair share.","url":"https://dealroom.so/glossary/prorated-property-tax","official_sources":[],"related":[{"slug":"property-tax","url":"https://dealroom.so/glossary/property-tax"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"remediation","term":"Remediation","group":"Reading the business","definition":"The process of cleaning up or correcting environmental contamination or other hazardous conditions on a property. This is a critical concern for buyers as it can involve significant costs and liabilities.","url":"https://dealroom.so/glossary/remediation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"remediation-cost","url":"https://dealroom.so/glossary/remediation-cost"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"remediation-cost","term":"Remediation Cost","group":"Reading the business","definition":"The expenses associated with cleaning up environmental contamination or addressing hazardous conditions found on a business property. These costs can be substantial and directly impact the deal's viability.","url":"https://dealroom.so/glossary/remediation-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"remediation","url":"https://dealroom.so/glossary/remediation"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"reserves","term":"Reserves","group":"Your money in the deal","definition":"Funds set aside by the buyer, often required by the lender, to cover unexpected expenses or provide a cushion during the initial operating period after acquisition. These are typically part of your equity injection.","url":"https://dealroom.so/glossary/reserves","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"revolving-line-of-credit","term":"Revolving Line of Credit","group":"The loan itself","definition":"A flexible loan that allows a business to borrow, repay, and re-borrow up to a certain limit as needed. It's often used for short-term working capital needs or managing seasonal fluctuations.","url":"https://dealroom.so/glossary/revolving-line-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"}]},{"slug":"sba-authorization","term":"SBA Authorization","group":"People and paperwork","definition":"This is the official document from the SBA that approves your loan, outlining all the terms, conditions, and requirements. It's the blueprint for your 7(a) loan.","url":"https://dealroom.so/glossary/sba-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"sba-franchise-directory","term":"SBA Franchise Directory","group":"People and paperwork","definition":"A list of franchise systems that the SBA has reviewed and deemed eligible for 7(a) loan financing. If your target franchise isn't on it, getting an SBA loan is much harder.","url":"https://dealroom.so/glossary/sba-franchise-directory","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"}]},{"slug":"sba-servicing-fee","term":"SBA Servicing Fee","group":"The loan itself","definition":"This is an annual fee paid by the lender to the SBA for the privilege of making an SBA-guaranteed loan. The lender passes this cost on to you, the borrower.","url":"https://dealroom.so/glossary/sba-servicing-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"sole-proprietorship","term":"Sole Proprietorship","group":"People and paperwork","definition":"A business owned and run by one individual where there is no legal distinction between the owner and the business itself. The owner is personally liable for all business debts.","url":"https://dealroom.so/glossary/sole-proprietorship","official_sources":[],"related":[{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"standby-note","term":"Standby Note","group":"The loan itself","definition":"A type of seller financing where the seller agrees to defer repayment of their loan until the SBA loan is fully satisfied or certain conditions are met. It's essentially 'subordinated' to the SBA loan.","url":"https://dealroom.so/glossary/standby-note","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"standby-provisions","term":"Standby Provisions","group":"The loan itself","definition":"Specific clauses within a seller note or other debt agreements that ensure the SBA loan takes priority for repayment. They restrict payments on other debt until the SBA loan is adequately serviced.","url":"https://dealroom.so/glossary/standby-provisions","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-standby-agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"statement-of-affiliation","term":"Statement of Affiliation","group":"People and paperwork","definition":"A form or process where the SBA determines if your business is 'affiliated' with other businesses, which can impact your eligibility based on size standards.","url":"https://dealroom.so/glossary/statement-of-affiliation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"subsequent-financing","term":"Subsequent Financing","group":"The loan itself","definition":"Any additional debt you take on after your initial SBA 7(a) loan has closed. This can impact your ability to repay your existing loan.","url":"https://dealroom.so/glossary/subsequent-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"tangible-assets","term":"Tangible Assets","group":"Reading the business","definition":"Physical assets that have a material form and can be touched, such as equipment, inventory, real estate, and vehicles. These are often used as collateral for loans.","url":"https://dealroom.so/glossary/tangible-assets","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"tenant-improvement","term":"Tenant Improvement","group":"Reading the business","definition":"Modifications made to a leased commercial space to customize it for the tenant's specific business needs. These can range from minor cosmetic changes to major structural renovations.","url":"https://dealroom.so/glossary/tenant-improvement","official_sources":[],"related":[{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"tenant-improvement-allowance","url":"https://dealroom.so/glossary/tenant-improvement-allowance"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"tenant-improvement-allowance","term":"Tenant Improvement Allowance","group":"Reading the business","definition":"Funds provided by a landlord to a tenant to help cover the costs of customizing a leased space. This is a common incentive in commercial leases.","url":"https://dealroom.so/glossary/tenant-improvement-allowance","official_sources":[],"related":[{"slug":"tenant-improvement","url":"https://dealroom.so/glossary/tenant-improvement"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"title-companies","term":"Title Companies","group":"People and paperwork","definition":"Businesses that ensure clear ownership of real estate and facilitate its transfer, often by performing title searches and issuing title insurance.","url":"https://dealroom.so/glossary/title-companies","official_sources":[],"related":[{"slug":"title-transfer","url":"https://dealroom.so/glossary/title-transfer"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"title-transfer","term":"Title Transfer","group":"Doing the deal","definition":"The legal process of changing ownership of an asset, most commonly real estate or vehicles, from one party to another.","url":"https://dealroom.so/glossary/title-transfer","official_sources":[],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"title-companies","url":"https://dealroom.so/glossary/title-companies"}]},{"slug":"tranche","term":"Tranche","group":"The loan itself","definition":"A segment or portion of a larger loan or security, often with different terms, risks, and interest rates.","url":"https://dealroom.so/glossary/tranche","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"subsequent-financing","url":"https://dealroom.so/glossary/subsequent-financing"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"trust","term":"Trust","group":"People and paperwork","definition":"A legal arrangement where assets are held by one party (the trustee) for the benefit of another (the beneficiary). For a buyer, this can complicate ownership and control in a business acquisition.","url":"https://dealroom.so/glossary/trust","official_sources":[],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"unconditionally-subordinated","term":"Unconditionally Subordinated","group":"The loan itself","definition":"This describes a seller note or other debt that agrees to be paid only after the SBA loan is fully satisfied, with no conditions or exceptions. It's a key requirement for SBA loan eligibility.","url":"https://dealroom.so/glossary/unconditionally-subordinated","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"unencumbered-cash","term":"Unencumbered Cash","group":"Your money in the deal","definition":"Cash that is free from any liens, pledges, or restrictions. The SBA requires a buyer's equity injection to be unencumbered to ensure it's truly \"at risk.\"","url":"https://dealroom.so/glossary/unencumbered-cash","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"unencumbered-equity","term":"Unencumbered Equity","group":"Your money in the deal","definition":"This refers to assets, like real estate or marketable securities, that are owned outright and not pledged as collateral for other debts. 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This impacts your monthly payment fluctuations.","url":"https://dealroom.so/glossary/variable-rate-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"working-capital-line","term":"Working Capital Line","group":"The loan itself","definition":"A flexible loan that provides funds for a business's day-to-day operations, such as inventory or payroll. It's often used to bridge gaps in cash flow.","url":"https://dealroom.so/glossary/working-capital-line","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"environmental-liabilities","term":"Environmental Liabilities","group":"Reading the business","definition":"Potential costs or legal obligations arising from a business's past or present environmental impact, such as contamination or regulatory non-compliance. These can be significant and unexpected.","url":"https://dealroom.so/glossary/environmental-liabilities","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"perfected","term":"Perfected","group":"Doing the deal","definition":"Refers to the legal process that establishes a lender's priority claim over collateral. For a buyer, ensuring the SBA loan's lien is perfected is critical for the deal to close.","url":"https://dealroom.so/glossary/perfected","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"franchise-disclosure-document","term":"Franchise Disclosure Document","aka":"FDD","group":"People and paperwork","definition":"A legal document that franchisors must provide to prospective franchisees, outlining detailed information about the franchise system, its history, costs, and obligations. It's essential due diligence for any franchise buyer.","url":"https://dealroom.so/glossary/franchise-disclosure-document","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"source-of-funds-verification","term":"Source-of-Funds Verification","group":"People and paperwork","definition":"The process of proving where your down payment and working capital funds originated. The SBA requires this to ensure your equity injection is legitimate and unencumbered.","url":"https://dealroom.so/glossary/source-of-funds-verification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"unencumbered-cash","url":"https://dealroom.so/glossary/unencumbered-cash"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"}]},{"slug":"season","term":"Season","group":"The loan itself","definition":"To \"season\" funds means to hold them in a bank account for a period (typically 60-90 days) to prove they are truly yours and not newly acquired debt.","url":"https://dealroom.so/glossary/season","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"unencumbered-cash","url":"https://dealroom.so/glossary/unencumbered-cash"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"net-worth","term":"Net Worth","group":"Your money in the deal","definition":"The total value of an individual's or company's assets minus their liabilities. For a buyer, it's a key indicator of personal financial strength and eligibility for an SBA loan.","url":"https://dealroom.so/glossary/net-worth","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"liabilities","url":"https://dealroom.so/glossary/liabilities"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"assets","url":"https://dealroom.so/glossary/assets"}]},{"slug":"economic-life","term":"Economic Life","aka":"Useful life","group":"Reading the business","definition":"The period over which an asset is expected to be useful to its owner, generating revenue or providing service. The SBA uses this to determine loan terms for certain assets.","url":"https://dealroom.so/glossary/economic-life","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"trade-payables","term":"Trade Payables","aka":"Accounts Payable","group":"Reading the business","definition":"These are amounts a business owes its suppliers for goods or services purchased on credit. As a buyer, you need to understand the payment terms and current balances to assess the business's short-term liabilities and working capital needs post-acquisition.","url":"https://dealroom.so/glossary/trade-payables","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"repayment-ability","term":"Repayment Ability","group":"Reading the business","definition":"This is the business's capacity to generate enough cash flow to cover all its debt obligations, including your new SBA loan. Lenders scrutinize this to ensure the business can handle the loan payments.","url":"https://dealroom.so/glossary/repayment-ability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"}]},{"slug":"customer-concentration-risk","term":"Customer Concentration Risk","group":"Reading the business","definition":"This is the risk that a large portion of a business's revenue comes from a single customer or a small group of customers. Losing one major customer could severely impact the business's cash flow.","url":"https://dealroom.so/glossary/customer-concentration-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"marketability","url":"https://dealroom.so/glossary/marketability"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"encumbrance","term":"Encumbrance","group":"Doing the deal","definition":"An encumbrance is a claim or liability against an asset, like a lien or a mortgage, that restricts its transferability or use. It means someone else has a right to that asset.","url":"https://dealroom.so/glossary/encumbrance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"tax-delinquency","term":"Tax Delinquency","group":"Reading the business","definition":"This means a business has failed to pay its required taxes on time, potentially resulting in penalties, interest, and government liens. It signals financial distress and compliance issues.","url":"https://dealroom.so/glossary/tax-delinquency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"marketability","term":"Marketability","group":"Reading the business","definition":"This refers to how easily and quickly a business or its assets could be sold in the market. 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It's the final financial summary of the transaction.","url":"https://dealroom.so/glossary/closing-statement","official_sources":[],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"principal-balance","term":"Principal Balance","group":"The loan itself","definition":"This is the outstanding amount of your loan that you still owe, excluding any accrued interest. It's the core debt amount you are repaying over time.","url":"https://dealroom.so/glossary/principal-balance","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"maturity-date","url":"https://dealroom.so/glossary/maturity-date"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"non-cash-equity-injection","term":"Non-Cash Equity Injection","group":"Your money in the deal","definition":"This is your required equity injection that isn't cash, such as a seller note on full standby or an asset like real estate. 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It determines your control, rights to profits, and responsibilities within the company.","url":"https://dealroom.so/glossary/ownership-stake","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"minority-partner","term":"Minority Partner","group":"People and paperwork","definition":"A minority partner owns less than 50% of the business, meaning they typically don't have controlling interest. 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It tells you how long the business can survive before running out of money.","url":"https://dealroom.so/glossary/burn-rate","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"leasehold-mortgage","term":"Leasehold Mortgage","group":"Doing the deal","definition":"This is a mortgage on your leasehold interest in a property, rather than on the property itself. It allows you to use your long-term lease as collateral for a loan.","url":"https://dealroom.so/glossary/leasehold-mortgage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"leasehold-interest","url":"https://dealroom.so/glossary/leasehold-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"landlord-consent","url":"https://dealroom.so/glossary/landlord-consent"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"leasehold-interest","term":"Leasehold Interest","group":"Reading the business","definition":"This is your right to possess and use a property for a defined period under a lease agreement. 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It's less comprehensive than a full personal guarantee.","url":"https://dealroom.so/glossary/limited-personal-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"minority-partner","url":"https://dealroom.so/glossary/minority-partner"}]},{"slug":"co-signer","term":"Co-signer","group":"People and paperwork","definition":"A co-signer is someone who agrees to be equally responsible for a loan repayment. For an SBA loan, they are signing on with you, not just guaranteeing your debt.","url":"https://dealroom.so/glossary/co-signer","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"co-applicant","url":"https://dealroom.so/glossary/co-applicant"},{"slug":"jointly-and-severally-liable","url":"https://dealroom.so/glossary/jointly-and-severally-liable"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"spousal-consent","term":"Spousal Consent","group":"People and paperwork","definition":"Spousal consent is a document where your spouse acknowledges the debt you're taking on, especially if marital assets could be affected by a personal guarantee. It prevents future claims against the collateral.","url":"https://dealroom.so/glossary/spousal-consent","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"jointly-and-severally-liable","url":"https://dealroom.so/glossary/jointly-and-severally-liable"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"federal-student-loan-default","term":"Federal Student Loan Default","group":"People and paperwork","definition":"Defaulting on federal student loans means you failed to make payments as agreed. This is a red flag for SBA lenders and can make you ineligible for an SBA loan.","url":"https://dealroom.so/glossary/federal-student-loan-default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"discharge-order","term":"Discharge Order","group":"People and paperwork","definition":"A discharge order is a court order that releases a debtor from personal liability for certain debts after a bankruptcy proceeding. It means creditors cannot pursue those discharged debts.","url":"https://dealroom.so/glossary/discharge-order","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"chapter-11-bankruptcy","url":"https://dealroom.so/glossary/chapter-11-bankruptcy"},{"slug":"chapter-7-bankruptcy","url":"https://dealroom.so/glossary/chapter-7-bankruptcy"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"fixed-spread","term":"Fixed Spread","group":"The loan itself","definition":"A fixed spread is the unchanging margin added to a variable base rate to determine your loan's interest rate. While the total rate fluctuates, the spread itself remains constant.","url":"https://dealroom.so/glossary/fixed-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"sba-peg-rate","url":"https://dealroom.so/glossary/sba-peg-rate"}]},{"slug":"sba-peg-rate","term":"SBA Peg Rate","group":"The loan itself","definition":"The SBA Peg Rate is an alternative base rate lenders can use for variable interest rates on SBA 7(a) loans. It's set by the SBA and changes quarterly.","url":"https://dealroom.so/glossary/sba-peg-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"fixed-spread","url":"https://dealroom.so/glossary/fixed-spread"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"co-applicant","term":"Co-applicant","group":"People and paperwork","definition":"A co-applicant is another individual applying for the loan with you, sharing equal responsibility for repayment. They are a co-borrower, not just a guarantor.","url":"https://dealroom.so/glossary/co-applicant","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"co-signer","url":"https://dealroom.so/glossary/co-signer"},{"slug":"jointly-and-severally-liable","url":"https://dealroom.so/glossary/jointly-and-severally-liable"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"working-capital-injection","term":"Working Capital Injection","group":"Your money in the deal","definition":"This is part of your equity injection specifically designated to fund the business's immediate operational needs after acquisition, like inventory or payroll. It's often required by the SBA.","url":"https://dealroom.so/glossary/working-capital-injection","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"letter-of-explanation","term":"Letter of Explanation","group":"People and paperwork","definition":"A Letter of Explanation is a written statement you provide to the lender to clarify specific items on your credit report or financial history. It addresses potential concerns directly.","url":"https://dealroom.so/glossary/letter-of-explanation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"fully-secured","term":"Fully Secured","group":"The loan itself","definition":"A loan is fully secured when the combined value of all pledged collateral is equal to or greater than the loan amount. This reduces the lender's risk.","url":"https://dealroom.so/glossary/fully-secured","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"contingent-liability","term":"Contingent Liability","group":"Reading the business","definition":"A contingent liability is a potential future financial obligation that depends on the outcome of a future event. It's not a definite debt yet, but could become one.","url":"https://dealroom.so/glossary/contingent-liability","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"subordinate","term":"Subordinate","group":"Doing the deal","definition":"To subordinate means to rank a debt or claim below another in terms of payment priority. The subordinated party agrees to be paid after others.","url":"https://dealroom.so/glossary/subordinate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"}]},{"slug":"chapter-11-bankruptcy","term":"Chapter 11 Bankruptcy","group":"People and paperwork","definition":"Chapter 11 bankruptcy is a form of bankruptcy that allows a business or individual to reorganize their debts while continuing operations. It's a court-supervised repayment plan.","url":"https://dealroom.so/glossary/chapter-11-bankruptcy","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"discharge-order","url":"https://dealroom.so/glossary/discharge-order"},{"slug":"chapter-7-bankruptcy","url":"https://dealroom.so/glossary/chapter-7-bankruptcy"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"jointly-and-severally-liable","term":"Jointly and Severally Liable","group":"People and paperwork","definition":"This means each party is individually responsible for the entire debt, and together they are also responsible. The lender can pursue any one party for the full amount.","url":"https://dealroom.so/glossary/jointly-and-severally-liable","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"co-signer","url":"https://dealroom.so/glossary/co-signer"},{"slug":"co-applicant","url":"https://dealroom.so/glossary/co-applicant"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"independent-appraisal","term":"Independent Appraisal","group":"Reading the business","definition":"A professional valuation of the business performed by an unbiased third party. Lenders require this to ensure the purchase price is fair and the collateral covers the loan amount.","url":"https://dealroom.so/glossary/independent-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"subordinated-loan","term":"Subordinated Loan","group":"The loan itself","definition":"A loan that ranks below other debts in terms of repayment priority. If the business defaults, other creditors get paid back before the subordinated lender.","url":"https://dealroom.so/glossary/subordinated-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-standby-agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"}]},{"slug":"rollover-as-business-startup-plan","term":"Rollover as Business Startup Plan","aka":"ROBS plan","group":"Your money in the deal","definition":"A method to use funds from a Qualified Retirement Plan to finance a business acquisition without incurring early withdrawal penalties or taxes. It involves creating a new C-corporation and a new 401(k) plan.","url":"https://dealroom.so/glossary/rollover-as-business-startup-plan","official_sources":[],"related":[{"slug":"qualified-retirement-plan","url":"https://dealroom.so/glossary/qualified-retirement-plan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"}]},{"slug":"qualified-retirement-plan","term":"Qualified Retirement Plan","group":"Your money in the deal","definition":"An employer-sponsored retirement plan, like a 401(k), 403(b), or pension, that meets specific IRS requirements for tax-deferred growth. These funds can sometimes be used to finance a business.","url":"https://dealroom.so/glossary/qualified-retirement-plan","official_sources":[],"related":[{"slug":"rollover-as-business-startup-plan","url":"https://dealroom.so/glossary/rollover-as-business-startup-plan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"}]},{"slug":"risk-capital","term":"Risk Capital","group":"Your money in the deal","definition":"The portion of a business's funding that is at the highest risk, typically the owner's personal investment (equity injection). It's money you stand to lose if the business fails.","url":"https://dealroom.so/glossary/risk-capital","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"equity","url":"https://dealroom.so/glossary/equity"}]},{"slug":"anti-money-laundering-regulations","term":"Anti-Money Laundering Regulations","aka":"AML regulations","group":"People and paperwork","definition":"Laws designed to prevent criminals from disguising illegally obtained funds as legitimate income. Banks must report suspicious transactions to the government.","url":"https://dealroom.so/glossary/anti-money-laundering-regulations","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"deferred-principal-payments","term":"Deferred Principal Payments","group":"The loan itself","definition":"A period during a loan's term where you only pay interest, and no principal. This reduces initial monthly payments, providing a grace period before full amortization begins.","url":"https://dealroom.so/glossary/deferred-principal-payments","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"liquidity","term":"Liquidity","group":"Reading the business","definition":"The ease with which an asset can be converted into cash without affecting its market price. For a business, it refers to its ability to meet short-term obligations.","url":"https://dealroom.so/glossary/liquidity","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"},{"slug":"brokerage-statement","url":"https://dealroom.so/glossary/brokerage-statement"}]},{"slug":"pre-paid-expenses","term":"Pre-Paid Expenses","group":"Reading the business","definition":"Expenses paid in advance for goods or services that will be consumed in the future, such as insurance premiums or rent. They are recorded as assets on the balance sheet.","url":"https://dealroom.so/glossary/pre-paid-expenses","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"purchase-contract","term":"Purchase Contract","group":"Doing the deal","definition":"The legally binding agreement between a buyer and seller detailing the terms and conditions of a business acquisition. It specifies what is being bought, the price, and closing conditions.","url":"https://dealroom.so/glossary/purchase-contract","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"lease-term","term":"Lease Term","group":"Reading the business","definition":"The duration of a lease agreement, specifying how long the tenant has the right to occupy the property. This is crucial for businesses operating from a leased location.","url":"https://dealroom.so/glossary/lease-term","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"maturity","url":"https://dealroom.so/glossary/maturity"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"control-agreement","term":"Control Agreement","group":"Doing the deal","definition":"A legal agreement granting a secured party, usually a lender, control over a borrower's deposit accounts or investment property. It perfects the lender's security interest in these assets.","url":"https://dealroom.so/glossary/control-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"assignee","term":"Assignee","group":"People and paperwork","definition":"The party to whom a right or obligation under a contract is transferred. In a business sale, the buyer is often the assignee of various contracts.","url":"https://dealroom.so/glossary/assignee","official_sources":[],"related":[{"slug":"purchase-contract","url":"https://dealroom.so/glossary/purchase-contract"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"equity","term":"Equity","group":"Your money in the deal","definition":"The ownership interest in a business, representing the value remaining after all liabilities are paid. For a buyer, it's the cash or assets directly invested in the deal.","url":"https://dealroom.so/glossary/equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"risk-capital","url":"https://dealroom.so/glossary/risk-capital"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"personal-net-worth","term":"Personal Net Worth","group":"Your money in the deal","definition":"Your personal net worth is the total value of your assets minus your liabilities. Lenders assess it to determine your financial strength and capacity to withstand business risks, impacting your eligibility for an SBA loan.","url":"https://dealroom.so/glossary/personal-net-worth","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"}]},{"slug":"personally-liable","term":"Personally Liable","aka":"Personal Guarantee","group":"People and paperwork","definition":"Being personally liable means you are individually responsible for repaying a business loan if the business cannot. This is a standard requirement for all 20%+ owners of an SBA 7(a) loan.","url":"https://dealroom.so/glossary/personally-liable","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"conviction","term":"Conviction","group":"People and paperwork","definition":"A conviction is a formal declaration that someone is guilty of a criminal offense. Certain criminal convictions can make you ineligible for an SBA loan, so disclosure is critical.","url":"https://dealroom.so/glossary/conviction","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"misdemeanor","url":"https://dealroom.so/glossary/misdemeanor"}]},{"slug":"non-delegated-loan","term":"Non-Delegated Loan","aka":"Non-delegated lender","group":"The loan itself","definition":"A non-delegated loan means the SBA itself must review and approve your loan application, not just the lender. This process takes longer than with a delegated lender.","url":"https://dealroom.so/glossary/non-delegated-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"}]},{"slug":"cash-flow-analysis","term":"Cash Flow Analysis","group":"Reading the business","definition":"Cash flow analysis examines a business's ability to generate enough cash to cover its expenses, including debt payments. It's the primary way lenders determine if the business can repay the loan.","url":"https://dealroom.so/glossary/cash-flow-analysis","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"majority-ownership","term":"Majority Ownership","group":"Your money in the deal","definition":"Majority ownership means owning more than 50% of a business. For an SBA loan, this usually triggers the requirement to personally guarantee the loan.","url":"https://dealroom.so/glossary/majority-ownership","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personally-liable","url":"https://dealroom.so/glossary/personally-liable"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"management-control","url":"https://dealroom.so/glossary/management-control"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"management-control","term":"Management Control","group":"Reading the business","definition":"Management control refers to the ability to make operational and strategic decisions for a business. The SBA requires the buyer to have sufficient management control after closing.","url":"https://dealroom.so/glossary/management-control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"majority-ownership","url":"https://dealroom.so/glossary/majority-ownership"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"indemnification","term":"Indemnification","aka":"Hold harmless","group":"Doing the deal","definition":"Indemnification is a contractual promise by one party to compensate another for losses or damages. In an acquisition, it protects the buyer from financial harm caused by seller misrepresentations or pre-closing liabilities.","url":"https://dealroom.so/glossary/indemnification","official_sources":[],"related":[{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"transferability-clause","term":"Transferability Clause","aka":"Assignment clause","group":"Doing the deal","definition":"A transferability clause dictates whether and how a contract, like a lease or franchise agreement, can be assigned to a new owner. This is crucial for seamless business transitions.","url":"https://dealroom.so/glossary/transferability-clause","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"franchise-resale","term":"Franchise Resale","aka":"Existing franchise acquisition","group":"Doing the deal","definition":"A franchise resale is the acquisition of an existing franchised business from a current franchisee. This process involves approval from both the seller and the franchisor.","url":"https://dealroom.so/glossary/franchise-resale","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"origination-fee","term":"Origination Fee","group":"The loan itself","definition":"An origination fee is a charge from the lender for processing and underwriting your loan application. It covers the administrative costs of setting up your SBA loan.","url":"https://dealroom.so/glossary/origination-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"first-disbursement","term":"First Disbursement","aka":"Loan funding","group":"The loan itself","definition":"The first disbursement is when the initial funds from your SBA loan are released, typically at closing. This marks the official funding of your acquisition.","url":"https://dealroom.so/glossary/first-disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"closing-date","url":"https://dealroom.so/glossary/closing-date"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"closing-date","term":"Closing Date","aka":"Close of escrow","group":"Doing the deal","definition":"The closing date is the final day when all legal documents are signed, funds are exchanged, and ownership officially transfers. This is the culmination of your acquisition process.","url":"https://dealroom.so/glossary/closing-date","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"first-disbursement","url":"https://dealroom.so/glossary/first-disbursement"}]},{"slug":"operating-account","term":"Operating Account","aka":"Business checking account","group":"Reading the business","definition":"An operating account is the primary bank account used for a business's daily income and expenses. Analyzing its statements reveals the true cash flow and financial activity.","url":"https://dealroom.so/glossary/operating-account","official_sources":[],"related":[{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"amortization-schedule","term":"Amortization Schedule","group":"The loan itself","definition":"This is a table showing every payment you'll make on your loan, detailing how much goes to principal and how much to interest over the loan's life. It helps you see exactly how your debt decreases over time.","url":"https://dealroom.so/glossary/amortization-schedule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"principal-and-interest-payment","url":"https://dealroom.so/glossary/principal-and-interest-payment"},{"slug":"outstanding-balance","url":"https://dealroom.so/glossary/outstanding-balance"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"principal-and-interest-payment","term":"Principal and Interest Payment","aka":"P&I Payment","group":"The loan itself","definition":"This is the regular payment you make on your loan, covering both the portion that reduces your outstanding balance (principal) and the cost of borrowing (interest). It's your primary recurring loan expense.","url":"https://dealroom.so/glossary/principal-and-interest-payment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"outstanding-balance","url":"https://dealroom.so/glossary/outstanding-balance"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"}]},{"slug":"qualified-appraiser","term":"Qualified Appraiser","group":"People and paperwork","definition":"This is an independent professional with expertise and credentials to determine the fair market value of assets or a business. Their valuation is crucial for collateral and business purchase price justification.","url":"https://dealroom.so/glossary/qualified-appraiser","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"ucc-search","term":"UCC Search","group":"Doing the deal","definition":"A UCC Search checks public records for any liens filed against a business's assets under the Uniform Commercial Code. This reveals if the seller has existing debts secured by business assets.","url":"https://dealroom.so/glossary/ucc-search","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-perfection","url":"https://dealroom.so/glossary/lien-perfection"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"lien-perfection","term":"Lien Perfection","group":"Doing the deal","definition":"This is the legal process of establishing a lender's enforceable claim (lien) on a borrower's collateral, making it publicly known and prioritized over other creditors. It protects the lender's interest if the borrower defaults.","url":"https://dealroom.so/glossary/lien-perfection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"repair-of-guaranty","term":"Repair of Guaranty","group":"The loan itself","definition":"This is when the SBA reduces the percentage of its guaranty on a loan due to a lender's failure to follow program rules. It means the lender bears more risk on the loan.","url":"https://dealroom.so/glossary/repair-of-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"denial-of-guaranty","url":"https://dealroom.so/glossary/denial-of-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"denial-of-guaranty","term":"Denial of Guaranty","group":"The loan itself","definition":"This is when the SBA completely refuses to honor its guaranty to the lender, typically due to significant violations of program requirements by the lender. The lender is then solely responsible for the defaulted loan.","url":"https://dealroom.so/glossary/denial-of-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"repair-of-guaranty","url":"https://dealroom.so/glossary/repair-of-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"outstanding-balance","term":"Outstanding Balance","group":"The loan itself","definition":"This is the total amount of money you currently owe on your loan, excluding future interest. It's the principal amount remaining before any new payments are applied.","url":"https://dealroom.so/glossary/outstanding-balance","official_sources":[],"related":[{"slug":"principal-and-interest-payment","url":"https://dealroom.so/glossary/principal-and-interest-payment"},{"slug":"amortization-schedule","url":"https://dealroom.so/glossary/amortization-schedule"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"loan-modification","term":"Loan Modification","group":"The loan itself","definition":"This is a change to the original terms of your loan, such as the interest rate, payment schedule, or maturity date. It's typically done to help a borrower facing financial hardship.","url":"https://dealroom.so/glossary/loan-modification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"collateral-release","term":"Collateral Release","group":"Doing the deal","definition":"This is the formal process of removing a lender's security interest (lien) from a specific asset or assets that were pledged as collateral. It frees up the asset from the loan obligation.","url":"https://dealroom.so/glossary/collateral-release","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"outstanding-balance","url":"https://dealroom.so/glossary/outstanding-balance"}]},{"slug":"lender-s-transcript-of-account","term":"Lender's Transcript of Account","aka":"SBA Form 1149","group":"People and paperwork","definition":"This is a detailed record provided by the lender to the SBA, showing the loan's payment history, outstanding balance, and any charges or credits. It's used to support a guaranty purchase request.","url":"https://dealroom.so/glossary/lender-s-transcript-of-account","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"outstanding-balance","url":"https://dealroom.so/glossary/outstanding-balance"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"liquidation-analysis","term":"Liquidation Analysis","group":"Reading the business","definition":"This is an assessment of what a business's assets would be worth if sold quickly, typically in a forced sale scenario. It helps lenders understand the potential recovery if a loan defaults.","url":"https://dealroom.so/glossary/liquidation-analysis","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"small-business-scoring-service-score","term":"Small Business Scoring Service Score","aka":"SBSS score","group":"Reading the business","definition":"This is a credit score for small businesses, used by the SBA for evaluating eligibility and creditworthiness for certain loans, especially smaller ones. It's a quick indicator of risk.","url":"https://dealroom.so/glossary/small-business-scoring-service-score","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"7-a-small-loan","url":"https://dealroom.so/glossary/7-a-small-loan"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"}]},{"slug":"london-interbank-offered-rate","term":"London Interbank Offered Rate","aka":"LIBOR","group":"The loan itself","definition":"LIBOR was a benchmark interest rate used globally for various financial products, including some variable-rate loans. It has been phased out and replaced by other reference rates.","url":"https://dealroom.so/glossary/london-interbank-offered-rate","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"base-rate","url":"https://dealroom.so/glossary/base-rate"}]},{"slug":"average-annual-receipts","term":"Average Annual Receipts","group":"Reading the business","definition":"This is the SBA's measure of a business's size, typically an average of its gross revenue over the past five fiscal years. It determines if a business is considered \"small\" and eligible for an SBA loan.","url":"https://dealroom.so/glossary/average-annual-receipts","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"affiliation-analysis","term":"Affiliation Analysis","group":"Reading the business","definition":"This is the SBA's process for determining if separate businesses are controlled by the same person or group, treating them as one entity for size standard purposes. It's crucial for confirming loan eligibility.","url":"https://dealroom.so/glossary/affiliation-analysis","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"passive-investment","term":"Passive Investment","group":"The loan itself","definition":"An SBA loan generally cannot be used to fund a business where the owner isn't actively involved in daily operations. The SBA wants to support active small business owners.","url":"https://dealroom.so/glossary/passive-investment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"speculation","url":"https://dealroom.so/glossary/speculation"},{"slug":"passive-activity","url":"https://dealroom.so/glossary/passive-activity"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"speculation","term":"Speculation","group":"The loan itself","definition":"This refers to using SBA loan funds for ventures that are highly uncertain or primarily aim to profit from future price changes, like buying and selling commodities. Such uses are strictly prohibited.","url":"https://dealroom.so/glossary/speculation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"passive-investment","url":"https://dealroom.so/glossary/passive-investment"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"passive-activity","term":"Passive Activity","group":"The loan itself","definition":"This describes business operations where the owner does not materially participate, such as simply owning rental property. SBA loans are generally not permitted for such activities.","url":"https://dealroom.so/glossary/passive-activity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"passive-investment","url":"https://dealroom.so/glossary/passive-investment"},{"slug":"speculation","url":"https://dealroom.so/glossary/speculation"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"gift","term":"Gift","group":"Your money in the deal","definition":"A gift is money given to the buyer by an immediate family member to fund a portion of their equity injection. It must be truly unencumbered and not require repayment.","url":"https://dealroom.so/glossary/gift","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"trustee","term":"Trustee","group":"People and paperwork","definition":"A trustee is an individual or institution appointed to hold and administer assets for the benefit of another party, known as the beneficiary. They have a fiduciary duty to act in the beneficiary's best interest.","url":"https://dealroom.so/glossary/trustee","official_sources":[],"related":[{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"executor","url":"https://dealroom.so/glossary/executor"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"executor","term":"Executor","group":"People and paperwork","definition":"An executor is the person named in a will, or appointed by a court, to carry out the wishes of the deceased and manage their estate. They handle asset distribution and debt settlement.","url":"https://dealroom.so/glossary/executor","official_sources":[],"related":[{"slug":"trustee","url":"https://dealroom.so/glossary/trustee"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"character","term":"Character","group":"People and paperwork","definition":"This refers to the borrower's honesty, integrity, and credit history, a critical factor for SBA loan approval. Lenders assess your willingness and ability to repay debt.","url":"https://dealroom.so/glossary/character","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"federal-debt","url":"https://dealroom.so/glossary/federal-debt"}]},{"slug":"federal-debt","term":"Federal Debt","group":"People and paperwork","definition":"This refers to any outstanding debt owed to the U.S. government, such as student loans, tax liens, or prior SBA loans. Having unresolvable federal debt can disqualify you.","url":"https://dealroom.so/glossary/federal-debt","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"character","url":"https://dealroom.so/glossary/character"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"buyout","term":"Buyout","group":"Doing the deal","definition":"A buyout is the purchase of a controlling interest in a company, typically where the buyer acquires most or all of the existing ownership shares. This is the goal of your acquisition.","url":"https://dealroom.so/glossary/buyout","official_sources":[],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"payroll-taxes","term":"Payroll Taxes","group":"Reading the business","definition":"These are taxes withheld from employee wages and employer contributions, covering Social Security, Medicare, and unemployment. Delinquent payroll taxes are a major red flag for lenders.","url":"https://dealroom.so/glossary/payroll-taxes","official_sources":[],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"sba-preferred-lender","term":"SBA Preferred Lender","aka":"PLP Lender","group":"People and paperwork","definition":"A Preferred Lender is a bank authorized by the SBA to make and approve 7(a) loans without prior SBA review, significantly speeding up the loan process.","url":"https://dealroom.so/glossary/sba-preferred-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"voting-equity","term":"Voting Equity","group":"Your money in the deal","definition":"This refers to ownership shares in a company that grant the holder the right to vote on corporate matters, such as board elections or major decisions. It represents control.","url":"https://dealroom.so/glossary/voting-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"guaranty-repair","term":"Guaranty Repair","group":"The loan itself","definition":"When the SBA fixes a lender's mistake in the loan process, allowing the SBA guaranty to remain intact. This protects the lender's exposure and your loan's backing.","url":"https://dealroom.so/glossary/guaranty-repair","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-purchase","url":"https://dealroom.so/glossary/guaranty-purchase"},{"slug":"guaranty-denial","url":"https://dealroom.so/glossary/guaranty-denial"},{"slug":"servicing-action","url":"https://dealroom.so/glossary/servicing-action"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"guaranty-purchase","term":"Guaranty Purchase","group":"The loan itself","definition":"When a defaulted SBA loan is too far gone for the lender to collect, the SBA \"buys\" the guaranteed portion of the loan from the lender. This kicks off the SBA's own collection efforts.","url":"https://dealroom.so/glossary/guaranty-purchase","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-repair","url":"https://dealroom.so/glossary/guaranty-repair"},{"slug":"guaranty-denial","url":"https://dealroom.so/glossary/guaranty-denial"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"e-tran","term":"E-Tran","aka":"Electronic Transmittal","group":"People and paperwork","definition":"E-Tran is the SBA's online system where lenders submit loan applications and servicing requests. It's how your loan officially gets processed and tracked by the SBA.","url":"https://dealroom.so/glossary/e-tran","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"credit-memo","term":"Credit Memo","group":"Reading the business","definition":"This is the lender's internal document that summarizes their analysis of your loan application and the business. It details why they believe you and the business are creditworthy.","url":"https://dealroom.so/glossary/credit-memo","official_sources":[],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"standby-period","term":"Standby Period","group":"Your money in the deal","definition":"A Standby Period is a time, typically 1-2 years, during which a seller note or other subordinated debt cannot receive principal or interest payments. This makes your equity injection look stronger.","url":"https://dealroom.so/glossary/standby-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"servicing-action","term":"Servicing Action","group":"The loan itself","definition":"Any change or modification made to an SBA loan after it's closed, like deferring payments or changing collateral. These require SBA approval, often through E-Tran.","url":"https://dealroom.so/glossary/servicing-action","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"guaranty-repair","url":"https://dealroom.so/glossary/guaranty-repair"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"}]},{"slug":"subordination-of-lien","term":"Subordination of Lien","group":"The loan itself","definition":"This is an agreement where one creditor (like a seller) agrees their claim on collateral is secondary to another creditor (like the SBA lender). It ensures the SBA lender gets paid first.","url":"https://dealroom.so/glossary/subordination-of-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"security-agreement","url":"https://dealroom.so/glossary/security-agreement"}]},{"slug":"guaranty-denial","term":"Guaranty Denial","group":"The loan itself","definition":"When the SBA refuses to honor its guaranty to a lender for a defaulted loan, usually due to a serious error or fraud by the lender or borrower. The lender takes the full loss.","url":"https://dealroom.so/glossary/guaranty-denial","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-purchase","url":"https://dealroom.so/glossary/guaranty-purchase"},{"slug":"guaranty-repair","url":"https://dealroom.so/glossary/guaranty-repair"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"90-day-rule","term":"90-Day Rule","group":"The loan itself","definition":"This SBA rule limits what collateral or equity can be injected or released within 90 days of an SBA loan application or disbursement. It prevents circular funding or \"round-tripping.\"","url":"https://dealroom.so/glossary/90-day-rule","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"security-agreement","term":"Security Agreement","group":"Doing the deal","definition":"A legal document that grants the lender a security interest in specific assets of the business (collateral) to secure the loan. If you default, the lender can seize these assets.","url":"https://dealroom.so/glossary/security-agreement","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"probation","term":"Probation","group":"People and paperwork","definition":"A court-ordered period of supervision after a criminal conviction, allowing an individual to avoid incarceration if they meet certain conditions. It's a red flag for SBA loan eligibility.","url":"https://dealroom.so/glossary/probation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"parole","url":"https://dealroom.so/glossary/parole"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"breach-of-trust","url":"https://dealroom.so/glossary/breach-of-trust"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"parole","term":"Parole","group":"People and paperwork","definition":"The conditional release of a prisoner before their full sentence is served, subject to specific supervision and rules. Like probation, it impacts SBA loan eligibility.","url":"https://dealroom.so/glossary/parole","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"probation","url":"https://dealroom.so/glossary/probation"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"breach-of-trust","url":"https://dealroom.so/glossary/breach-of-trust"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"breach-of-trust","term":"Breach of Trust","group":"People and paperwork","definition":"A violation of a fiduciary duty or misuse of entrusted funds or property. The SBA considers convictions for such crimes as a serious character issue for loan applicants.","url":"https://dealroom.so/glossary/breach-of-trust","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"probation","url":"https://dealroom.so/glossary/probation"}]},{"slug":"acquisition-loan","term":"Acquisition Loan","group":"The loan itself","definition":"A loan specifically used to finance the purchase of an existing business, including goodwill and assets. This is the primary use for SBA 7(a) loans in a business purchase.","url":"https://dealroom.so/glossary/acquisition-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"passive-real-estate-investment","term":"Passive Real Estate Investment","group":"The loan itself","definition":"An investment where you're not actively managing the property. SBA 7(a) loans are for active operating businesses, not just holding real estate for rental income, so this is generally ineligible.","url":"https://dealroom.so/glossary/passive-real-estate-investment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"deferment","term":"Deferment","group":"The loan itself","definition":"A period where your loan payments are temporarily paused or reduced. It's a temporary relief measure, typically for principal payments, and interest usually continues to accrue.","url":"https://dealroom.so/glossary/deferment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"recovery","url":"https://dealroom.so/glossary/recovery"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"}]},{"slug":"equipment-loan","term":"Equipment Loan","group":"The loan itself","definition":"A type of loan specifically used to purchase machinery, vehicles, or other business equipment. For a small business acquisition, it's often part of the larger 7(a) loan package.","url":"https://dealroom.so/glossary/equipment-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"affiliation-rule","term":"Affiliation Rule","group":"Reading the business","definition":"SBA rules that determine if one business is controlled by or connected to another, even if not formally owned. This matters for size standards and eligibility.","url":"https://dealroom.so/glossary/affiliation-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"condition-precedent-to-closing","term":"Condition Precedent to Closing","group":"Doing the deal","definition":"Specific requirements that must be met by both buyer and seller before the deal can legally close. Failing to satisfy these can kill the deal.","url":"https://dealroom.so/glossary/condition-precedent-to-closing","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"depreciated-book-value","term":"Depreciated Book Value","group":"Reading the business","definition":"The value of an asset recorded on a company's balance sheet after accounting for accumulated depreciation. It reflects the asset's original cost minus its wear and tear over time.","url":"https://dealroom.so/glossary/depreciated-book-value","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"non-cash-assets","term":"Non-Cash Assets","group":"Reading the business","definition":"Assets a business owns that are not readily convertible to cash, such as equipment, inventory, or accounts receivable. They are important for operations but not for immediate liquidity.","url":"https://dealroom.so/glossary/non-cash-assets","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"cost-or-market","term":"Cost or Market","group":"Reading the business","definition":"An accounting principle for valuing inventory, stating it should be recorded at the lower of its original cost or its current market value. This prevents overstating asset values.","url":"https://dealroom.so/glossary/cost-or-market","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"assignment-of-guaranty","term":"Assignment of Guaranty","aka":"SBA Form 1088","group":"People and paperwork","definition":"A document where the SBA transfers its interest in a loan guaranty from one lender to another. This is an internal SBA process, not something buyers directly handle.","url":"https://dealroom.so/glossary/assignment-of-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"},{"slug":"loan-portfolio","url":"https://dealroom.so/glossary/loan-portfolio"}]},{"slug":"endorsement","term":"Endorsement","group":"Doing the deal","definition":"An amendment or attachment to a legal document, like an insurance policy or a loan agreement, that modifies its terms. It's a formal way to update or clarify existing provisions.","url":"https://dealroom.so/glossary/endorsement","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"fiscal-transfer-agent","term":"Fiscal Transfer Agent","group":"People and paperwork","definition":"An entity, usually a bank, that handles the issuance, transfer, and redemption of government securities. For SBA loans, this agent facilitates the secondary market for the guaranteed portion.","url":"https://dealroom.so/glossary/fiscal-transfer-agent","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"pooling","url":"https://dealroom.so/glossary/pooling"},{"slug":"loan-portfolio","url":"https://dealroom.so/glossary/loan-portfolio"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"}]},{"slug":"loan-portfolio","term":"Loan Portfolio","group":"The loan itself","definition":"A collection of loans held by a lender or investor. Lenders manage their portfolios to balance risk and return.","url":"https://dealroom.so/glossary/loan-portfolio","official_sources":[],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"pooling","url":"https://dealroom.so/glossary/pooling"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"recovery","term":"Recovery","group":"The loan itself","definition":"The amount of money a lender or the SBA collects from a borrower or collateral after a loan defaults. It's the process of getting back funds lost.","url":"https://dealroom.so/glossary/recovery","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"prior-approval","term":"Prior Approval","group":"The loan itself","definition":"Specific actions or changes related to an SBA loan that require the lender to obtain explicit permission from the SBA beforehand. This ensures compliance with program rules.","url":"https://dealroom.so/glossary/prior-approval","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"collateral-substitution","term":"Collateral Substitution","group":"The loan itself","definition":"When a borrower wants to swap out one piece of collateral securing their SBA loan for another. This happens after the loan closes and requires SBA approval.","url":"https://dealroom.so/glossary/collateral-substitution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"loss-calculation","term":"Loss Calculation","group":"The loan itself","definition":"How the SBA determines the amount it will pay a lender when a guaranteed loan defaults. It involves subtracting any recoveries the lender made from the outstanding principal and interest.","url":"https://dealroom.so/glossary/loss-calculation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"}]},{"slug":"viable-going-concern","term":"Viable Going Concern","group":"Reading the business","definition":"A business that can operate profitably and generate sufficient cash flow to cover its expenses and debt obligations into the foreseeable future. Lenders look for this to ensure repayment capacity.","url":"https://dealroom.so/glossary/viable-going-concern","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"transaction-screen","term":"Transaction Screen","group":"Reading the business","definition":"A limited environmental assessment performed on a property to identify potential environmental risks. It's less intensive than a Phase I ESA.","url":"https://dealroom.so/glossary/transaction-screen","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-esa","url":"https://dealroom.so/glossary/phase-i-esa"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"phase-i-esa","term":"Phase I ESA","aka":"Phase I Environmental Site Assessment","group":"Reading the business","definition":"A detailed environmental investigation of a property to identify potential contamination. Lenders often require this, especially for properties with historical industrial use or known risks.","url":"https://dealroom.so/glossary/phase-i-esa","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"e-2-visa","term":"E-2 Visa","group":"People and paperwork","definition":"A non-immigrant visa for individuals from treaty countries who invest a substantial amount of capital in a U.S. business. It allows them to develop and direct the enterprise.","url":"https://dealroom.so/glossary/e-2-visa","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"l-1-visa","term":"L-1 Visa","group":"People and paperwork","definition":"A non-immigrant visa allowing a U.S. employer to transfer an executive, manager, or specialized knowledge employee from one of its affiliated foreign offices to one of its offices in the United States.","url":"https://dealroom.so/glossary/l-1-visa","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"h-1b-visa","term":"H-1B Visa","group":"People and paperwork","definition":"A non-immigrant visa that allows U.S. employers to temporarily employ foreign workers in specialty occupations. These occupations generally require a bachelor's degree or higher.","url":"https://dealroom.so/glossary/h-1b-visa","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"seasoned","term":"Seasoned","group":"The loan itself","definition":"Refers to funds that have been held in an account for a sufficient period (typically 60-90 days) to demonstrate they are truly yours and not borrowed or round-tripped.","url":"https://dealroom.so/glossary/seasoned","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"}]},{"slug":"aml-compliance","term":"AML Compliance","aka":"Anti-Money Laundering compliance","group":"People and paperwork","definition":"Regulations and procedures financial institutions must follow to prevent and detect money laundering. This includes verifying customer identities and reporting suspicious transactions.","url":"https://dealroom.so/glossary/aml-compliance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"taxpayer-identification-number","url":"https://dealroom.so/glossary/taxpayer-identification-number"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"stock-option-agreement","term":"Stock Option Agreement","group":"Doing the deal","definition":"A contract that gives an employee or investor the right, but not the obligation, to purchase a company's stock at a predetermined price within a certain timeframe.","url":"https://dealroom.so/glossary/stock-option-agreement","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"common-control","url":"https://dealroom.so/glossary/common-control"},{"slug":"warrant","url":"https://dealroom.so/glossary/warrant"}]},{"slug":"convertible-note","term":"Convertible Note","group":"Your money in the deal","definition":"A type of short-term debt that converts into equity at a later date, usually during a future funding round or acquisition.","url":"https://dealroom.so/glossary/convertible-note","official_sources":[],"related":[{"slug":"warrant","url":"https://dealroom.so/glossary/warrant"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"common-control","term":"Common Control","group":"Reading the business","definition":"When a single individual or entity has the power to control two or more businesses. This affects SBA size standards and affiliation rules.","url":"https://dealroom.so/glossary/common-control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"}]},{"slug":"warrant","term":"Warrant","group":"Your money in the deal","definition":"A security that gives the holder the right to purchase the underlying stock of a company at a fixed price and time, similar to an option but typically issued by the company itself.","url":"https://dealroom.so/glossary/warrant","official_sources":[],"related":[{"slug":"convertible-note","url":"https://dealroom.so/glossary/convertible-note"},{"slug":"stock-option-agreement","url":"https://dealroom.so/glossary/stock-option-agreement"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"convertible-debt","term":"Convertible Debt","group":"Your money in the deal","definition":"A type of loan that can be converted into equity (ownership) in the company instead of being repaid with cash. As a buyer, you need to understand if any existing convertible debt will convert before or after your acquisition, impacting your ownership stake.","url":"https://dealroom.so/glossary/convertible-debt","official_sources":[],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"collateralization","term":"Collateralization","group":"The loan itself","definition":"This is the process of pledging assets, like the business's equipment or real estate, to secure a loan. For your SBA 7(a) loan, the SBA requires sufficient collateral to protect the lender in case you default, making it a critical aspect of loan approval.","url":"https://dealroom.so/glossary/collateralization","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"settlement-statement","term":"Settlement Statement","aka":"Closing Statement","group":"Doing the deal","definition":"This document details all funds exchanged between parties in a transaction, including the purchase price, fees, and prorations. You'll review this at closing to ensure all financial aspects of the deal are accurately reflected and accounted for.","url":"https://dealroom.so/glossary/settlement-statement","official_sources":[],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"504-loan","term":"504 Loan","group":"The loan itself","definition":"An SBA loan program designed for long-term fixed asset financing, like real estate or major equipment, typically for expansion. It's different from a 7(a) loan and usually not used for pure business acquisitions without significant real estate.","url":"https://dealroom.so/glossary/504-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"principals","term":"Principals","group":"People and paperwork","definition":"These are the key individuals who own 20% or more of the business, or those with significant management responsibilities, regardless of ownership percentage. As a buyer, you and any Co-borrower will be considered Principals, and the SBA will scrutinize your character and financial history.","url":"https://dealroom.so/glossary/principals","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"felony-conviction","url":"https://dealroom.so/glossary/felony-conviction"}]},{"slug":"felony-conviction","term":"Felony Conviction","aka":"Felony","group":"People and paperwork","definition":"A conviction for a serious crime. For SBA loans, any Felony Conviction, or even an indictment, for you or any Principal can make you ineligible for the loan. This is a critical character eligibility requirement.","url":"https://dealroom.so/glossary/felony-conviction","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"principals","url":"https://dealroom.so/glossary/principals"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"office-of-franchise-and-business-opportunity","term":"Office of Franchise and Business Opportunity","aka":"OFBO","group":"People and paperwork","definition":"This is the SBA department that reviews franchise agreements to determine if they meet SBA eligibility requirements for financing. If you're buying a Franchise, the OFBO's approval is essential for your 7(a) loan.","url":"https://dealroom.so/glossary/office-of-franchise-and-business-opportunity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"exhibit","term":"Exhibit","group":"People and paperwork","definition":"A document or item attached to and referenced within a larger legal agreement, such as a purchase agreement or loan document. Exhibits provide detailed information that supports the main contract without cluttering the primary text.","url":"https://dealroom.so/glossary/exhibit","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"purchase-agreement","url":"https://dealroom.so/glossary/purchase-agreement"}]},{"slug":"loan-pooling","term":"Loan Pooling","aka":"Pooling","group":"The loan itself","definition":"The process where SBA-guaranteed portions of multiple 7(a) loans are combined into a pool and sold as securities to investors. This secondary market activity provides liquidity to lenders, encouraging them to make more SBA loans.","url":"https://dealroom.so/glossary/loan-pooling","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"servicing-rights","url":"https://dealroom.so/glossary/servicing-rights"},{"slug":"fiscal-and-transfer-agent","url":"https://dealroom.so/glossary/fiscal-and-transfer-agent"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"servicing-rights","term":"Servicing Rights","group":"The loan itself","definition":"The contractual right to collect loan payments, manage escrow accounts, and handle customer service for a loan. Even if your lender sells your loan into a pool, they often retain the Servicing Rights, meaning you'll continue to interact with them.","url":"https://dealroom.so/glossary/servicing-rights","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-pooling","url":"https://dealroom.so/glossary/loan-pooling"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"}]},{"slug":"holder","term":"Holder","group":"People and paperwork","definition":"The entity or individual legally possessing a financial instrument, like a promissory Note or a security. The Holder has the right to enforce the terms of that instrument, such as demanding payment on a loan.","url":"https://dealroom.so/glossary/holder","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"note","url":"https://dealroom.so/glossary/note"},{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"servicing-rights","url":"https://dealroom.so/glossary/servicing-rights"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"}]},{"slug":"workout-analysis","term":"Workout Analysis","group":"The loan itself","definition":"An assessment performed by a lender when a borrower is struggling to make loan payments, evaluating options to restructure the loan to avoid default and liquidation. This is what happens if your business hits hard times.","url":"https://dealroom.so/glossary/workout-analysis","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"deferment-period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"}]},{"slug":"demand-letter","term":"Demand Letter","group":"The loan itself","definition":"A formal letter from a lender to a borrower, stating that a loan is in default and demanding immediate repayment of the entire outstanding balance. This is a serious step, typically preceding Foreclosure or other legal action.","url":"https://dealroom.so/glossary/demand-letter","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"ucc-foreclosure-process","url":"https://dealroom.so/glossary/ucc-foreclosure-process"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"ucc-foreclosure-process","term":"UCC Foreclosure Process","group":"The loan itself","definition":"The legal procedure lenders use to seize and sell business assets (Collateral) when a loan secured by a UCC lien goes into default. This process allows the lender to recover their losses without judicial intervention in many cases.","url":"https://dealroom.so/glossary/ucc-foreclosure-process","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"guaranty-agreement","term":"Guaranty Agreement","group":"The loan itself","definition":"This is the legal document where you agree to personally repay the SBA 7(a) loan if the business defaults. It makes you, the buyer, personally responsible for the debt.","url":"https://dealroom.so/glossary/guaranty-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"liquidation-expense-summary","term":"Liquidation Expense Summary","group":"The loan itself","definition":"This is an SBA form estimating the costs involved if the SBA has to liquidate the collateral for a defaulted loan. It helps determine the potential loss for the SBA.","url":"https://dealroom.so/glossary/liquidation-expense-summary","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"lender-s-certificate","term":"Lender's Certificate","group":"People and paperwork","definition":"A document signed by the lender certifying that they've met all SBA requirements for the 7(a) loan. It confirms compliance with SBA rules before the loan is funded.","url":"https://dealroom.so/glossary/lender-s-certificate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"wall-street-journal-prime-rate","term":"Wall Street Journal Prime Rate","aka":"WSJ Prime","group":"The loan itself","definition":"This is a widely published interest rate that banks use as a base for many variable-rate loans. For SBA 7(a) loans, it's often the benchmark to which a \"spread\" is added to calculate your interest rate.","url":"https://dealroom.so/glossary/wall-street-journal-prime-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"},{"slug":"variable-rate-loan","url":"https://dealroom.so/glossary/variable-rate-loan"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"secured-overnight-financing-rate","term":"Secured Overnight Financing Rate","aka":"SOFR","group":"The loan itself","definition":"SOFR is a new benchmark interest rate used for many variable-rate loans, replacing LIBOR. Like WSJ Prime, a \"spread\" is added to SOFR to determine your actual loan interest rate.","url":"https://dealroom.so/glossary/secured-overnight-financing-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate-loan","url":"https://dealroom.so/glossary/variable-rate-loan"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"}]},{"slug":"loan-authorization-amendment","term":"Loan Authorization Amendment","aka":"Amended SBA Loan Authorization","group":"The loan itself","definition":"A formal document that modifies the original SBA Loan Authorization. It's needed for any significant changes to the loan terms, conditions, or parties involved after initial approval.","url":"https://dealroom.so/glossary/loan-authorization-amendment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"material-change","url":"https://dealroom.so/glossary/material-change"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"closing","url":"https://dealroom.so/glossary/closing"}]},{"slug":"material-change","term":"Material Change","group":"Doing the deal","definition":"Any significant alteration to the terms, conditions, or facts of a loan transaction that could affect the SBA's risk or the lender's decision. This requires SBA approval.","url":"https://dealroom.so/glossary/material-change","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-authorization-amendment","url":"https://dealroom.so/glossary/loan-authorization-amendment"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"statement-of-personal-history","term":"Statement of Personal History","aka":"SBA Form 912","group":"People and paperwork","definition":"This form collects your personal background information, including any criminal history, to assess your character and eligibility for federal financial assistance.","url":"https://dealroom.so/glossary/statement-of-personal-history","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"office-of-financial-assistance","term":"Office of Financial Assistance","aka":"OFA","group":"People and paperwork","definition":"This is the specific branch within the Small Business Administration (SBA) responsible for overseeing and managing the 7(a) loan program and other financial support initiatives.","url":"https://dealroom.so/glossary/office-of-financial-assistance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"flood-hazard-area","term":"Flood Hazard Area","group":"Reading the business","definition":"An area identified by FEMA as having a high risk of flooding. If the business property is located here, flood insurance will be mandatory for your SBA loan.","url":"https://dealroom.so/glossary/flood-hazard-area","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"special-flood-hazard-area","url":"https://dealroom.so/glossary/special-flood-hazard-area"},{"slug":"flood-hazard-determination","url":"https://dealroom.so/glossary/flood-hazard-determination"},{"slug":"flood-insurance","url":"https://dealroom.so/glossary/flood-insurance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"flood-insurance","term":"flood insurance","group":"The loan itself","definition":"Insurance required by the SBA for any collateral property located in a Special Flood Hazard Area (SFHA) to protect against damage from flooding.","url":"https://dealroom.so/glossary/flood-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"flood-hazard-area","url":"https://dealroom.so/glossary/flood-hazard-area"},{"slug":"special-flood-hazard-area","url":"https://dealroom.so/glossary/special-flood-hazard-area"},{"slug":"flood-hazard-determination","url":"https://dealroom.so/glossary/flood-hazard-determination"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"flood-hazard-determination","term":"flood hazard determination","group":"Doing the deal","definition":"A report determining if a property is located in a Special Flood Hazard Area (SFHA) as designated by FEMA. This is a required step for all SBA 7(a) loans.","url":"https://dealroom.so/glossary/flood-hazard-determination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"special-flood-hazard-area","url":"https://dealroom.so/glossary/special-flood-hazard-area"},{"slug":"flood-hazard-area","url":"https://dealroom.so/glossary/flood-hazard-area"},{"slug":"flood-insurance","url":"https://dealroom.so/glossary/flood-insurance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"special-flood-hazard-area","term":"Special Flood Hazard Area","aka":"SFHA","group":"Doing the deal","definition":"A specific zone identified by FEMA as having a 1% or greater annual chance of flooding. If the business property is in an SFHA, flood insurance is legally required for your SBA loan.","url":"https://dealroom.so/glossary/special-flood-hazard-area","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"flood-hazard-area","url":"https://dealroom.so/glossary/flood-hazard-area"},{"slug":"flood-insurance","url":"https://dealroom.so/glossary/flood-insurance"},{"slug":"flood-hazard-determination","url":"https://dealroom.so/glossary/flood-hazard-determination"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"fema-flood-map","term":"FEMA flood map","group":"Doing the deal","definition":"Identifies areas at risk of flooding. Your lender will require flood insurance if the business property or collateral is in a designated flood zone, adding to your operating costs.","url":"https://dealroom.so/glossary/fema-flood-map","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"loss-payee","term":"Loss payee","group":"The loan itself","definition":"The party designated to receive payment from an insurance policy in case of loss or damage. Your lender will be listed as a loss payee on your business insurance policies.","url":"https://dealroom.so/glossary/loss-payee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"}]},{"slug":"decreasing-term-life-insurance-policy","term":"Decreasing term life insurance policy","group":"The loan itself","definition":"A life insurance policy where the death benefit decreases over time, often used to match the declining principal balance of a loan. It ensures the loan is repaid if a key guarantor dies.","url":"https://dealroom.so/glossary/decreasing-term-life-insurance-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"}]},{"slug":"beneficiary-designation","term":"Beneficiary designation","group":"People and paperwork","definition":"Naming who receives the proceeds from an asset, like a life insurance policy, upon the owner's death. For an SBA loan, the lender will likely be designated as the beneficiary or assignee of your required life insurance.","url":"https://dealroom.so/glossary/beneficiary-designation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"decreasing-term-life-insurance-policy","url":"https://dealroom.so/glossary/decreasing-term-life-insurance-policy"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"}]},{"slug":"unguaranteed-portion","term":"Unguaranteed portion","group":"The loan itself","definition":"The percentage of an SBA 7(a) loan that is not covered by the SBA guaranty. The lender bears 100% of the risk for this part if the borrower defaults.","url":"https://dealroom.so/glossary/unguaranteed-portion","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"secondary-market-investor","term":"Secondary market investor","group":"Doing the deal","definition":"An entity that buys and sells existing loan participations, often the guaranteed portion of SBA loans. Lenders sell portions of loans to these investors to free up capital for new lending.","url":"https://dealroom.so/glossary/secondary-market-investor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"pooling","url":"https://dealroom.so/glossary/pooling"},{"slug":"fiscal-and-transfer-agent","url":"https://dealroom.so/glossary/fiscal-and-transfer-agent"}]},{"slug":"workout-plan","term":"Workout plan","group":"The loan itself","definition":"An agreement between a borrower and lender to modify loan terms when the borrower faces financial distress, aiming to avoid default or liquidation. It's a structured attempt to resolve payment issues.","url":"https://dealroom.so/glossary/workout-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"liquidation-expenses","term":"Liquidation expenses","group":"Doing the deal","definition":"Costs incurred by the lender when recovering assets from a defaulting borrower to satisfy a loan. These can include legal fees, appraisal costs, and selling expenses.","url":"https://dealroom.so/glossary/liquidation-expenses","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"material-misrepresentation","term":"Material misrepresentation","group":"People and paperwork","definition":"Providing false or misleading information that significantly influences a lender's decision to approve a loan. This is a serious offense that can lead to loan acceleration and legal action.","url":"https://dealroom.so/glossary/material-misrepresentation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"borrower-fraud","url":"https://dealroom.so/glossary/borrower-fraud"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"}]},{"slug":"borrower-fraud","term":"Borrower fraud","group":"People and paperwork","definition":"Intentional deception by the borrower to obtain an SBA loan or avoid repayment. This is a federal crime with severe penalties and causes the SBA to deny its guaranty.","url":"https://dealroom.so/glossary/borrower-fraud","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"material-misrepresentation","url":"https://dealroom.so/glossary/material-misrepresentation"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"}]},{"slug":"libor-indexed-loan","term":"LIBOR-indexed loan","group":"The loan itself","definition":"A loan whose interest rate adjusts based on the London Interbank Offered Rate (LIBOR). LIBOR has been phased out, so existing loans were converted to alternative reference rates.","url":"https://dealroom.so/glossary/libor-indexed-loan","official_sources":[],"related":[{"slug":"libor","url":"https://dealroom.so/glossary/libor"},{"slug":"sofr-based-rate","url":"https://dealroom.so/glossary/sofr-based-rate"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"sofr-based-rate","term":"SOFR-based rate","group":"The loan itself","definition":"An interest rate tied to the Secured Overnight Financing Rate (SOFR), which replaced LIBOR as a key benchmark for variable-rate loans. Most new variable-rate SBA loans use a SOFR-based index.","url":"https://dealroom.so/glossary/sofr-based-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"collateral-valuation","term":"Collateral valuation","group":"Reading the business","definition":"The process of determining the market value of assets pledged as security for a loan. This helps the lender assess their recovery potential if the loan defaults.","url":"https://dealroom.so/glossary/collateral-valuation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"loan-structuring","term":"Loan structuring","group":"Doing the deal","definition":"The process of designing the specific terms and conditions of a loan, including interest rate, repayment schedule, collateral, and covenants. It's key to making the deal viable for both borrower and lender.","url":"https://dealroom.so/glossary/loan-structuring","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"disbursement-controls","term":"Disbursement Controls","group":"Doing the deal","definition":"These are conditions set by your lender for releasing loan funds, ensuring money is used only for approved purposes. You need to understand when and how funds will be released to manage your acquisition and post-closing cash flow.","url":"https://dealroom.so/glossary/disbursement-controls","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"negative-working-capital","term":"Negative Working Capital","group":"Reading the business","definition":"This occurs when a business's current liabilities exceed its current assets. It signals that the business may struggle to meet its short-term financial obligations, which is a red flag for lenders.","url":"https://dealroom.so/glossary/negative-working-capital","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"annual-service-fee","term":"Annual Service Fee","group":"The loan itself","definition":"This is a yearly fee the SBA charges the lender for guaranteeing your loan, which lenders typically pass on to you. It's an ongoing cost factored into your monthly loan payments.","url":"https://dealroom.so/glossary/annual-service-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"}]},{"slug":"permanent-resident-status","term":"Permanent Resident Status","group":"People and paperwork","definition":"This refers to your official status as a lawful permanent resident of the U.S. (e.g., Green Card holder). It's a critical SBA eligibility requirement for foreign national borrowers.","url":"https://dealroom.so/glossary/permanent-resident-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"declaration-of-intent","url":"https://dealroom.so/glossary/declaration-of-intent"}]},{"slug":"declaration-of-intent","term":"Declaration of Intent","group":"People and paperwork","definition":"This is a formal statement signed by a foreign national borrower indicating their intention to become a U.S. citizen. The SBA requires this if you are a 'Qualified Alien' but not yet a permanent resident.","url":"https://dealroom.so/glossary/declaration-of-intent","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"permanent-resident-status","url":"https://dealroom.so/glossary/permanent-resident-status"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"o-1-visa","term":"O-1 Visa","group":"People and paperwork","definition":"This is a non-immigrant visa for individuals with extraordinary ability. While it allows you to work in the U.S., it does not grant permanent resident status and generally makes you ineligible for an SBA loan as a borrower.","url":"https://dealroom.so/glossary/o-1-visa","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"permanent-resident-status","url":"https://dealroom.so/glossary/permanent-resident-status"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"foreign-sourced-equity-injection","term":"Foreign-Sourced Equity Injection","group":"Your money in the deal","definition":"This refers to the portion of your down payment that originates from bank accounts or assets outside the U.S. These funds face intense scrutiny from lenders due to anti-money laundering regulations.","url":"https://dealroom.so/glossary/foreign-sourced-equity-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"know-your-customer","url":"https://dealroom.so/glossary/know-your-customer"}]},{"slug":"correspondent-bank","term":"Correspondent Bank","group":"Doing the deal","definition":"This is a bank that facilitates transactions or services on behalf of another bank, often across international borders. It's how your foreign funds might be routed into the U.S.","url":"https://dealroom.so/glossary/correspondent-bank","official_sources":[],"related":[{"slug":"foreign-sourced-equity-injection","url":"https://dealroom.so/glossary/foreign-sourced-equity-injection"},{"slug":"know-your-customer","url":"https://dealroom.so/glossary/know-your-customer"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"know-your-customer","term":"Know Your Customer","group":"People and paperwork","definition":"Aka: KYC. This is a mandatory process where lenders verify a borrower's identity, financial history, and source of funds to comply with anti-money laundering laws. It's a rigorous part of SBA loan underwriting.","url":"https://dealroom.so/glossary/know-your-customer","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"foreign-sourced-equity-injection","url":"https://dealroom.so/glossary/foreign-sourced-equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"loan-deferment-period","term":"Loan Deferment Period","group":"The loan itself","definition":"This is an initial period, typically at the start of your loan, during which you only pay interest, or sometimes no payments are due at all. Principal payments are postponed.","url":"https://dealroom.so/glossary/loan-deferment-period","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"unilateral-authority","term":"Unilateral Authority","group":"People and paperwork","definition":"This refers to the power of one individual to make decisions or take action without needing approval from others. The SBA requires this for key principals in an acquiring business.","url":"https://dealroom.so/glossary/unilateral-authority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"prior-liens","term":"Prior Liens","group":"Doing the deal","definition":"These are existing legal claims against a business's assets by other creditors, meaning those creditors have a superior right to the asset compared to your new SBA lender.","url":"https://dealroom.so/glossary/prior-liens","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"interest-rate-spread","term":"Interest Rate Spread","group":"The loan itself","definition":"This is the fixed percentage added to a fluctuating base interest rate (like WSJ Prime or Term SOFR) to determine your actual loan interest rate. It represents the lender's profit and risk assessment.","url":"https://dealroom.so/glossary/interest-rate-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"base-rate","url":"https://dealroom.so/glossary/base-rate"}]},{"slug":"sba-debt","term":"SBA Debt","group":"The loan itself","definition":"This refers to any outstanding loan guaranteed by the Small Business Administration. Your new 7(a) acquisition loan will add to your total SBA debt.","url":"https://dealroom.so/glossary/sba-debt","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"enforceable-first-lien-position","term":"Enforceable First Lien Position","group":"Doing the deal","definition":"This means the lender has the legal right to seize specific assets first if you default on the loan, ahead of any other creditors. As a buyer, this ensures the SBA lender's security, which is critical for loan approval.","url":"https://dealroom.so/glossary/enforceable-first-lien-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"perfected-lien","url":"https://dealroom.so/glossary/perfected-lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"}]},{"slug":"perfected-lien","term":"Perfected Lien","group":"Doing the deal","definition":"A perfected lien is a publicly recorded claim on an asset, giving the lender legal priority over others if the borrower defaults. For buyers, it means the lender's collateral is legally secured, which is a requirement for SBA loans.","url":"https://dealroom.so/glossary/perfected-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"enforceable-first-lien-position","url":"https://dealroom.so/glossary/enforceable-first-lien-position"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"business-assets","term":"Business Assets","group":"Reading the business","definition":"These are things the business owns that have value, like equipment, inventory, or customer lists. Buyers care because these assets generate revenue and serve as collateral for your SBA loan.","url":"https://dealroom.so/glossary/business-assets","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"minority-equity-stake","term":"Minority Equity Stake","group":"Your money in the deal","definition":"This is an ownership share in the business that is less than 50%, meaning you don't have controlling interest. For SBA loans, it typically refers to the portion of equity injection that isn't from the primary borrower.","url":"https://dealroom.so/glossary/minority-equity-stake","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"capital-injection","url":"https://dealroom.so/glossary/capital-injection"},{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"contributed-equipment","term":"Contributed Equipment","group":"Your money in the deal","definition":"This is machinery or other assets you already own and contribute to the acquired business instead of cash, counting towards your equity injection. It's a way to meet SBA equity requirements without depleting your cash.","url":"https://dealroom.so/glossary/contributed-equipment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"capital-injection","url":"https://dealroom.so/glossary/capital-injection"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"capital-injection","term":"Capital Injection","group":"Your money in the deal","definition":"This is the total amount of cash or eligible assets you put into the business to fund the acquisition and provide working capital. The SBA requires a minimum capital injection, typically 10-20% of the total project cost.","url":"https://dealroom.so/glossary/capital-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"borrowed-equity","term":"Borrowed Equity","group":"Your money in the deal","definition":"This refers to funds borrowed from another source (not the SBA loan) to meet the SBA's equity injection requirement. The SBA has strict rules on what qualifies as \"borrowed\" and how it impacts the deal.","url":"https://dealroom.so/glossary/borrowed-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"capital-injection","url":"https://dealroom.so/glossary/capital-injection"},{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"nada-guide","term":"NADA Guide","group":"Reading the business","definition":"This is a widely used valuation guide for vehicles, boats, and other equipment. Lenders often use it to assess the fair market value of vehicles included as business assets or collateral.","url":"https://dealroom.so/glossary/nada-guide","official_sources":[],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"business-assets","url":"https://dealroom.so/glossary/business-assets"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"gross-revenue","term":"Gross Revenue","group":"Reading the business","definition":"This is the total income a business generates from its sales of goods or services before any expenses are deducted. Buyers use it as a top-line indicator of business size and activity.","url":"https://dealroom.so/glossary/gross-revenue","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"financial-interdependence","term":"Financial Interdependence","group":"Reading the business","definition":"This describes a situation where the acquired business relies heavily on another business or entity for its financial health. This can be a red flag for buyers, indicating concentration risk.","url":"https://dealroom.so/glossary/financial-interdependence","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"size-eligibility","url":"https://dealroom.so/glossary/size-eligibility"}]},{"slug":"payment-history","term":"Payment History","group":"Reading the business","definition":"This is a record of how consistently and on time a business (or individual) has made past debt payments. Lenders review it to assess creditworthiness and repayment capacity.","url":"https://dealroom.so/glossary/payment-history","official_sources":[],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"environmental-risks","term":"Environmental Risks","group":"Reading the business","definition":"These are potential liabilities from past or current environmental issues, like contaminated soil or hazardous waste. Buyers must assess these risks as they can lead to significant cleanup costs and legal problems.","url":"https://dealroom.so/glossary/environmental-risks","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"lapse-in-coverage","term":"Lapse in Coverage","group":"The loan itself","definition":"This means a period where required insurance policies (like hazard or life insurance) were not in effect. Lenders consider this a serious issue as it exposes the collateral and the loan to uninsured risks.","url":"https://dealroom.so/glossary/lapse-in-coverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"size-eligibility","term":"Size Eligibility","group":"Reading the business","definition":"This refers to the SBA's rules that determine if a business is \"small\" enough to qualify for an SBA loan, based on factors like revenue or employee count. Your target business must meet these standards.","url":"https://dealroom.so/glossary/size-eligibility","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"gross-revenue","url":"https://dealroom.so/glossary/gross-revenue"}]},{"slug":"receivables","term":"receivables","group":"Reading the business","definition":"Money owed to the business by customers for goods or services already delivered. For a buyer, understanding receivables helps assess the business's immediate cash flow and the quality of its customer base.","url":"https://dealroom.so/glossary/receivables","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"historical-financial-statements","url":"https://dealroom.so/glossary/historical-financial-statements"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"seller-liabilities","term":"seller liabilities","group":"Reading the business","definition":"These are the debts and obligations the seller's business owes to others. As a buyer, you need to know exactly which liabilities you're taking on and which the seller retains, especially in an asset purchase.","url":"https://dealroom.so/glossary/seller-liabilities","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"independent-equipment-appraisal","term":"independent equipment appraisal","group":"Reading the business","definition":"A valuation of a business's machinery and equipment by an unbiased third party. This appraisal determines the fair market value of these assets, which is crucial for collateral in an SBA loan.","url":"https://dealroom.so/glossary/independent-equipment-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"recognized-environmental-conditions","term":"Recognized Environmental Conditions","aka":"RECs","group":"Reading the business","definition":"The presence or likely presence of hazardous substances or petroleum products on a property. For a buyer, RECs trigger environmental due diligence to assess potential clean-up costs and liabilities.","url":"https://dealroom.so/glossary/recognized-environmental-conditions","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"criminal-history","term":"criminal history","group":"People and paperwork","definition":"A record of past criminal convictions for you or any key principal in the business. This is a critical eligibility factor for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/criminal-history","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"tax-status","term":"tax status","group":"People and paperwork","definition":"How the business is structured for tax purposes (e.g., S-Corp, C-Corp, LLC, Sole Proprietor). This affects how the business's income and expenses are reported and taxed, directly impacting your personal tax situation.","url":"https://dealroom.so/glossary/tax-status","official_sources":[],"related":[{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"}]},{"slug":"capacity","term":"Capacity","group":"Reading the business","definition":"One of the \"5 Cs of Credit,\" referring to the borrower's ability to repay the loan from the business's cash flow. It's the most critical factor for an SBA lender.","url":"https://dealroom.so/glossary/capacity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"5-cs","url":"https://dealroom.so/glossary/5-cs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"capital","term":"Capital","group":"Reading the business","definition":"One of the \"5 Cs of Credit,\" referring to the borrower's equity injection and overall financial strength. It shows your personal commitment to the business and its ability to withstand financial shocks.","url":"https://dealroom.so/glossary/capital","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"5-cs","url":"https://dealroom.so/glossary/5-cs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"conditions","term":"Conditions","group":"Reading the business","definition":"One of the \"5 Cs of Credit,\" referring to the purpose of the loan and the economic environment in which the business operates. These external factors influence the business's success and repayment ability.","url":"https://dealroom.so/glossary/conditions","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"5-cs","url":"https://dealroom.so/glossary/5-cs"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"economic-interests","url":"https://dealroom.so/glossary/economic-interests"}]},{"slug":"historical-financial-statements","term":"historical financial statements","group":"Reading the business","definition":"Past financial records of the business, including Profit & Loss Statements and Balance Sheets, typically for the last three years. These are essential to understand the business's performance trends.","url":"https://dealroom.so/glossary/historical-financial-statements","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"economic-interests","term":"economic interests","group":"Reading the business","definition":"Any financial stake, ownership, or benefit that an individual or entity has in a business. For an SBA loan, these must be fully disclosed to identify potential conflicts or affiliations.","url":"https://dealroom.so/glossary/economic-interests","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"financial-ties","url":"https://dealroom.so/glossary/financial-ties"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"financial-ties","term":"financial ties","group":"Reading the business","definition":"Connections between individuals or businesses through debt, equity, or other financial relationships. These are important for the SBA to identify potential affiliations and conflicts of interest.","url":"https://dealroom.so/glossary/financial-ties","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"economic-interests","url":"https://dealroom.so/glossary/economic-interests"},{"slug":"size-determination","url":"https://dealroom.so/glossary/size-determination"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"shared-use-of-critical-resources","term":"shared use of critical resources","group":"Reading the business","definition":"When two or more businesses rely on the same essential assets, facilities, or personnel. This is a factor the SBA uses to determine if businesses are \"affiliated.\"","url":"https://dealroom.so/glossary/shared-use-of-critical-resources","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"size-determination","term":"size determination","group":"Reading the business","definition":"The SBA's process of evaluating if a business meets its \"small business\" definition, primarily based on revenue or employee count. This is a strict eligibility requirement for a 7(a) loan.","url":"https://dealroom.so/glossary/size-determination","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"comprehensive-appraisal","term":"Comprehensive Appraisal","group":"Reading the business","definition":"A detailed valuation report on the business, often required by SBA lenders to confirm the purchase price is fair. It tells you if you're overpaying for the assets or goodwill.","url":"https://dealroom.so/glossary/comprehensive-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"historical-earnings","term":"Historical Earnings","group":"Reading the business","definition":"The past financial performance of the business, usually measured over several years. This data is critical for assessing the business's stability and cash flow before you buy it.","url":"https://dealroom.so/glossary/historical-earnings","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"future-projections","term":"Future Projections","group":"Reading the business","definition":"Your best estimate of the business's financial performance after you take over. Lenders use these to gauge your ability to repay the SBA loan under your management.","url":"https://dealroom.so/glossary/future-projections","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"historical-earnings","url":"https://dealroom.so/glossary/historical-earnings"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"}]},{"slug":"franchisor-control","term":"Franchisor Control","group":"Reading the business","definition":"The level of influence a franchisor has over the operations of a franchised business. This can impact your autonomy as an owner and affect SBA loan eligibility.","url":"https://dealroom.so/glossary/franchisor-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"no-control-rule","term":"No Control Rule","group":"Reading the business","definition":"An SBA eligibility requirement stating that a business, to be eligible for an SBA loan, must not be controlled by another entity that itself is not eligible. This often applies to franchisors or other affiliates.","url":"https://dealroom.so/glossary/no-control-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchisor-control","url":"https://dealroom.so/glossary/franchisor-control"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"new-business-entity","term":"New Business Entity","group":"Doing the deal","definition":"The legal structure you create (e.g., LLC, Corporation) to purchase and operate the business. This entity will be the borrower on your SBA loan.","url":"https://dealroom.so/glossary/new-business-entity","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"recorded-lien","term":"Recorded Lien","group":"Doing the deal","definition":"A legal claim filed publicly against an asset, like equipment or real estate, indicating someone else has a financial interest in it. Lenders record liens to secure their loans.","url":"https://dealroom.so/glossary/recorded-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"employer-identification-number","term":"Employer Identification Number","group":"People and paperwork","definition":"A unique nine-digit number assigned by the IRS to identify a business entity. It's like a Social Security Number for your business.","url":"https://dealroom.so/glossary/employer-identification-number","official_sources":[],"related":[{"slug":"social-security-number","url":"https://dealroom.so/glossary/social-security-number"},{"slug":"taxpayer-identification-number","url":"https://dealroom.so/glossary/taxpayer-identification-number"},{"slug":"new-business-entity","url":"https://dealroom.so/glossary/new-business-entity"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"social-security-number","term":"Social Security Number","group":"People and paperwork","definition":"A unique nine-digit number assigned to individuals by the U.S. government. It identifies you for tax and credit purposes.","url":"https://dealroom.so/glossary/social-security-number","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"employer-identification-number","url":"https://dealroom.so/glossary/employer-identification-number"},{"slug":"taxpayer-identification-number","url":"https://dealroom.so/glossary/taxpayer-identification-number"},{"slug":"key-principals","url":"https://dealroom.so/glossary/key-principals"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"common-ownership","term":"Common Ownership","group":"Reading the business","definition":"When the same individuals or entities own a significant stake in multiple businesses. This can trigger SBA affiliation rules, potentially impacting loan eligibility.","url":"https://dealroom.so/glossary/common-ownership","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"security-agreements","term":"Security Agreements","group":"Doing the deal","definition":"Legal contracts that grant the lender a security interest in specific assets of the business, which act as collateral for the loan. These protect the lender's investment.","url":"https://dealroom.so/glossary/security-agreements","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"recorded-lien","url":"https://dealroom.so/glossary/recorded-lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"}]},{"slug":"key-principals","term":"Key Principals","group":"People and paperwork","definition":"Individuals who own 20% or more of the business, or those with significant management responsibilities. These are the people the SBA will scrutinize for loan eligibility and guarantees.","url":"https://dealroom.so/glossary/key-principals","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"social-security-number","url":"https://dealroom.so/glossary/social-security-number"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"collateral-assignee","term":"Collateral Assignee","group":"Doing the deal","definition":"A party, typically the SBA lender, to whom certain rights or assets are assigned as collateral for a loan. This protects the lender's interest.","url":"https://dealroom.so/glossary/collateral-assignee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"board-seat","term":"Board Seat","group":"People and paperwork","definition":"A position on a company's board of directors, which grants influence or control over strategic decisions and oversight. This can impact SBA affiliation rules.","url":"https://dealroom.so/glossary/board-seat","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"common-ownership","url":"https://dealroom.so/glossary/common-ownership"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"operating-agreement","term":"Operating Agreement","group":"People and paperwork","definition":"A legal document for an LLC that outlines the members' rights, responsibilities, and how the business is managed. As a buyer, you need to review this to understand governance and profit distribution.","url":"https://dealroom.so/glossary/operating-agreement","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"bylaws","url":"https://dealroom.so/glossary/bylaws"},{"slug":"shareholder-agreements","url":"https://dealroom.so/glossary/shareholder-agreements"},{"slug":"supermajority-voting-requirements","url":"https://dealroom.so/glossary/supermajority-voting-requirements"}]},{"slug":"bylaws","term":"Bylaws","group":"People and paperwork","definition":"The foundational rules for a corporation, detailing its governance, meetings, and responsibilities of directors and officers. Buyers must review these to understand the corporate structure and decision-making processes.","url":"https://dealroom.so/glossary/bylaws","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"operating-agreement","url":"https://dealroom.so/glossary/operating-agreement"},{"slug":"shareholder-agreements","url":"https://dealroom.so/glossary/shareholder-agreements"}]},{"slug":"shareholder-agreements","term":"Shareholder Agreements","group":"People and paperwork","definition":"A contract among shareholders of a corporation that governs their relationship, rights, and responsibilities, often including restrictions on share transfers. Buyers need to understand who controls the company and any limitations on future sales.","url":"https://dealroom.so/glossary/shareholder-agreements","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"bylaws","url":"https://dealroom.so/glossary/bylaws"}]},{"slug":"supermajority-voting-requirements","term":"Supermajority Voting Requirements","group":"People and paperwork","definition":"A provision in a company's governing documents that requires more than a simple majority vote (e.g., 67% or 75%) for certain key decisions. As a buyer, understand if these exist, as they can complicate future strategic changes or major asset sales.","url":"https://dealroom.so/glossary/supermajority-voting-requirements","official_sources":[],"related":[{"slug":"operating-agreement","url":"https://dealroom.so/glossary/operating-agreement"},{"slug":"bylaws","url":"https://dealroom.so/glossary/bylaws"},{"slug":"shareholder-agreements","url":"https://dealroom.so/glossary/shareholder-agreements"},{"slug":"power-to-control","url":"https://dealroom.so/glossary/power-to-control"}]},{"slug":"certifications","term":"Certifications","group":"People and paperwork","definition":"Formal attestations or statements confirming certain facts or conditions, often required by the lender or SBA. Buyers will sign many certifications, confirming their understanding and agreement to loan terms and eligibility.","url":"https://dealroom.so/glossary/certifications","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"disclosures","url":"https://dealroom.so/glossary/disclosures"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"disclosures","term":"Disclosures","group":"People and paperwork","definition":"Information that must be revealed to another party, typically regarding material facts about the business or the loan transaction. As a buyer, you rely on seller disclosures for due diligence, and you'll make disclosures to the lender and SBA.","url":"https://dealroom.so/glossary/disclosures","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"certifications","url":"https://dealroom.so/glossary/certifications"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"bank-statements","term":"Bank Statements","group":"People and paperwork","definition":"Records of all financial transactions in a bank account over a period, showing deposits, withdrawals, and balances. Buyers need to review the business's bank statements during due diligence to verify revenue, expenses, and cash flow.","url":"https://dealroom.so/glossary/bank-statements","official_sources":[],"related":[{"slug":"donor-bank-statements","url":"https://dealroom.so/glossary/donor-bank-statements"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"wire-transfer-confirmations","term":"Wire Transfer Confirmations","group":"People and paperwork","definition":"Receipts or records proving that funds were electronically sent from one bank account to another. Buyers will need these to demonstrate the transfer of their equity injection or other deal-related payments.","url":"https://dealroom.so/glossary/wire-transfer-confirmations","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bank-statements","url":"https://dealroom.so/glossary/bank-statements"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"cancelled-checks","url":"https://dealroom.so/glossary/cancelled-checks"}]},{"slug":"cancelled-checks","term":"Cancelled Checks","group":"People and paperwork","definition":"Checks that have been processed and paid by the bank, serving as proof of payment. For due diligence, cancelled checks provide an audit trail for specific expenses or payments made by the seller.","url":"https://dealroom.so/glossary/cancelled-checks","official_sources":[],"related":[{"slug":"bank-statements","url":"https://dealroom.so/glossary/bank-statements"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"wire-transfer-confirmations","url":"https://dealroom.so/glossary/wire-transfer-confirmations"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"}]},{"slug":"donor-bank-statements","term":"Donor Bank Statements","group":"People and paperwork","definition":"Bank statements from a person gifting funds to the buyer for their equity injection. If you receive a gift for your down payment, the lender will require these to verify the source and seasoning of those funds.","url":"https://dealroom.so/glossary/donor-bank-statements","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bank-statements","url":"https://dealroom.so/glossary/bank-statements"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"identity-of-interest","term":"Identity of Interest","group":"Reading the business","definition":"A relationship between parties that suggests they are not truly independent or acting at arm's length, such as family members or affiliated businesses. The SBA scrutinizes these relationships to prevent conflicts and ensure fair market value.","url":"https://dealroom.so/glossary/identity-of-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"immediate-family-members","url":"https://dealroom.so/glossary/immediate-family-members"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"power-to-control","url":"https://dealroom.so/glossary/power-to-control"}]},{"slug":"power-to-control","term":"Power to Control","group":"Reading the business","definition":"The ability of one entity or individual to direct the management and policies of another, even without majority ownership. The SBA uses this concept to determine affiliation, which can impact loan eligibility.","url":"https://dealroom.so/glossary/power-to-control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"identity-of-interest","url":"https://dealroom.so/glossary/identity-of-interest"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"immediate-family-members","term":"Immediate Family Members","group":"People and paperwork","definition":"For SBA purposes, this refers to a spouse, child, parent, sibling, or any of their spouses. The SBA often considers transactions or relationships between immediate family members to have an \"identity of interest.\"","url":"https://dealroom.so/glossary/immediate-family-members","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"identity-of-interest","url":"https://dealroom.so/glossary/identity-of-interest"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"disclosures","url":"https://dealroom.so/glossary/disclosures"}]},{"slug":"officers-directors","term":"Officers/Directors","aka":"Officers and Directors","group":"People and paperwork","definition":"Individuals who hold key leadership positions in a corporation, responsible for its management and governance. As a buyer, you need to understand who these people are, their roles, and any liabilities they carry.","url":"https://dealroom.so/glossary/officers-directors","official_sources":[],"related":[{"slug":"bylaws","url":"https://dealroom.so/glossary/bylaws"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"shareholder-agreements","url":"https://dealroom.so/glossary/shareholder-agreements"},{"slug":"power-to-control","url":"https://dealroom.so/glossary/power-to-control"}]},{"slug":"financial-dependence","term":"Financial dependence","group":"Reading the business","definition":"This refers to a business relying heavily on one or a few customers or suppliers. As a buyer, high financial dependence is a risk because losing a key relationship could severely impact revenue or operations.","url":"https://dealroom.so/glossary/financial-dependence","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"credit-underwriting","url":"https://dealroom.so/glossary/credit-underwriting"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"u-s-citizen","term":"U.S. citizen","group":"People and paperwork","definition":"A U.S. citizen is a person born in the U.S. or naturalized. As an SBA loan applicant, you must be a U.S. citizen, U.S. non-citizen national, or Qualified Alien.","url":"https://dealroom.so/glossary/u-s-citizen","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"u-s-non-citizen-national","url":"https://dealroom.so/glossary/u-s-non-citizen-national"},{"slug":"green-card","url":"https://dealroom.so/glossary/green-card"},{"slug":"temporary-visa-holder","url":"https://dealroom.so/glossary/temporary-visa-holder"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"}]},{"slug":"u-s-non-citizen-national","term":"U.S. non-citizen national","group":"People and paperwork","definition":"This is a person born in certain U.S. territories who is not a U.S. citizen, but owes allegiance to the U.S. They are eligible to apply for an SBA 7(a) loan, similar to citizens.","url":"https://dealroom.so/glossary/u-s-non-citizen-national","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"u-s-citizen","url":"https://dealroom.so/glossary/u-s-citizen"},{"slug":"green-card","url":"https://dealroom.so/glossary/green-card"},{"slug":"temporary-visa-holder","url":"https://dealroom.so/glossary/temporary-visa-holder"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"}]},{"slug":"green-card","term":"Green card","group":"People and paperwork","definition":"A green card, or Form I-551, is a permanent resident card for foreign nationals in the U.S. Holders are considered \"Qualified Aliens\" by the SBA and are eligible to apply for 7(a) loans.","url":"https://dealroom.so/glossary/green-card","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"u-s-citizen","url":"https://dealroom.so/glossary/u-s-citizen"},{"slug":"u-s-non-citizen-national","url":"https://dealroom.so/glossary/u-s-non-citizen-national"},{"slug":"temporary-visa-holder","url":"https://dealroom.so/glossary/temporary-visa-holder"}]},{"slug":"birth-certificate","term":"Birth certificate","group":"People and paperwork","definition":"A birth certificate is an official record of a person's birth, used to prove identity and U.S. citizenship. You'll need it if you're a U.S. citizen applying for an SBA loan and lack a passport.","url":"https://dealroom.so/glossary/birth-certificate","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"u-s-citizen","url":"https://dealroom.so/glossary/u-s-citizen"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"taxpayer-identification-number","url":"https://dealroom.so/glossary/taxpayer-identification-number"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"temporary-visa-holder","term":"Temporary visa holder","group":"People and paperwork","definition":"This refers to individuals in the U.S. on a non-immigrant visa (e.g., H-1B, L-1). They are generally not eligible for SBA 7(a) loans, as the SBA requires permanent residency or citizenship.","url":"https://dealroom.so/glossary/temporary-visa-holder","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"u-s-citizen","url":"https://dealroom.so/glossary/u-s-citizen"},{"slug":"u-s-non-citizen-national","url":"https://dealroom.so/glossary/u-s-non-citizen-national"},{"slug":"green-card","url":"https://dealroom.so/glossary/green-card"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"}]},{"slug":"ucc-1-filings","term":"UCC-1 filings","group":"Doing the deal","definition":"These are public notices filed by lenders to claim a security interest in a borrower's assets, like equipment or inventory. As a buyer, you need to ensure the seller's UCC-1s are released at closing.","url":"https://dealroom.so/glossary/ucc-1-filings","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"real-estate-mortgages","term":"Real estate mortgages","group":"Doing the deal","definition":"A mortgage is a legal agreement where a lender uses real property as collateral for a loan. If the business owns real estate, your SBA loan will likely be secured by a first lien on that property.","url":"https://dealroom.so/glossary/real-estate-mortgages","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"eligibility-determination","term":"Eligibility determination","group":"Doing the deal","definition":"This is the SBA's assessment of whether a business and its owners meet the criteria for a 7(a) loan. It's a critical step; if you're not eligible, the loan won't happen.","url":"https://dealroom.so/glossary/eligibility-determination","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"imprudent-lending-practices","term":"Imprudent lending practices","group":"Doing the deal","definition":"These are lending actions that don't follow sound financial principles or SBA rules, such as insufficient due diligence or weak collateral. Such practices can lead to the SBA denying its guaranty.","url":"https://dealroom.so/glossary/imprudent-lending-practices","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-underwriting","url":"https://dealroom.so/glossary/credit-underwriting"},{"slug":"credit-policies","url":"https://dealroom.so/glossary/credit-policies"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"unauthorized-servicing-actions","term":"Unauthorized servicing actions","group":"Doing the deal","definition":"These are actions taken by a lender regarding an SBA loan that violate SBA regulations or the loan authorization. They can result in the SBA refusing to honor its guaranty.","url":"https://dealroom.so/glossary/unauthorized-servicing-actions","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"repair-to-the-guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"repair-to-the-guaranty","term":"Repair to the guaranty","group":"The loan itself","definition":"This occurs when the SBA reduces the amount it pays a lender on a defaulted loan due to a lender's error. For you, it means your lender might become more aggressive in collecting from you.","url":"https://dealroom.so/glossary/repair-to-the-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"imprudent-lending-practices","url":"https://dealroom.so/glossary/imprudent-lending-practices"},{"slug":"unauthorized-servicing-actions","url":"https://dealroom.so/glossary/unauthorized-servicing-actions"}]},{"slug":"credit-underwriting","term":"Credit underwriting","group":"Doing the deal","definition":"This is the lender's process of evaluating your creditworthiness and the business's financial health to determine loan risk. It dictates whether you get approved and on what terms.","url":"https://dealroom.so/glossary/credit-underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-policies","url":"https://dealroom.so/glossary/credit-policies"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"credit-policies","term":"Credit policies","group":"Doing the deal","definition":"These are the internal rules and guidelines a lender uses to evaluate loan applications and manage risk. They define what types of businesses and borrowers a lender will finance.","url":"https://dealroom.so/glossary/credit-policies","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-underwriting","url":"https://dealroom.so/glossary/credit-underwriting"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"manual-underwriting","term":"manual underwriting","group":"Doing the deal","definition":"When a lender's human underwriters review your loan application, rather than relying solely on automated credit scoring. This happens for complex deals or when automated systems flag issues, requiring a deeper look.","url":"https://dealroom.so/glossary/manual-underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"eligibility-criterion","url":"https://dealroom.so/glossary/eligibility-criterion"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"sound-commercial-lending-practices","term":"sound commercial lending practices","group":"Doing the deal","definition":"These are the standard, prudent lending decisions and processes a bank follows to ensure a loan is creditworthy and protect its investment. The SBA requires lenders to follow these for 7(a) loans.","url":"https://dealroom.so/glossary/sound-commercial-lending-practices","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"eligibility-criterion","url":"https://dealroom.so/glossary/eligibility-criterion"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"environmental-remediation-plan","term":"environmental remediation plan","group":"Doing the deal","definition":"A detailed strategy to clean up environmental contamination at a property, often required if a Phase I or Phase II Environmental Site Assessment identifies significant issues. This protects both the buyer and the lender from future liability.","url":"https://dealroom.so/glossary/environmental-remediation-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"}]},{"slug":"audit-findings","term":"audit findings","group":"Reading the business","definition":"These are the conclusions and observations from an independent financial audit of the target business's financial statements. They highlight any discrepancies, weaknesses in internal controls, or non-compliance issues.","url":"https://dealroom.so/glossary/audit-findings","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"lien-searches","term":"lien searches","group":"Doing the deal","definition":"These investigations check public records to identify any existing claims or security interests (liens) against the business's assets or the seller. This ensures you're buying assets free and clear.","url":"https://dealroom.so/glossary/lien-searches","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"borrower-certification","term":"borrower certification","group":"People and paperwork","definition":"A formal statement signed by you, the borrower, attesting that the information provided in your loan application is true and accurate to the best of your knowledge. Misrepresentation can have serious consequences.","url":"https://dealroom.so/glossary/borrower-certification","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"size-and-use-of-proceeds-requirement","term":"size and use of proceeds requirement","group":"The loan itself","definition":"These are SBA rules dictating how large a loan can be and what the funds can be used for. They ensure the loan supports small businesses and aligns with program goals.","url":"https://dealroom.so/glossary/size-and-use-of-proceeds-requirement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"eligibility-criterion","url":"https://dealroom.so/glossary/eligibility-criterion"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"eligibility-criterion","term":"eligibility criterion","group":"Doing the deal","definition":"These are the specific conditions or qualifications a business and its owners must meet to be approved for an SBA 7(a) loan. If you don't meet them, you won't get the loan.","url":"https://dealroom.so/glossary/eligibility-criterion","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"caivrs-check","term":"CAIVRS check","group":"People and paperwork","definition":"A mandatory check of the Credit Alert Interactive Voice Response System (CAIVRS) to see if you or any key principals have defaulted on federal debt, like previous SBA or student loans.","url":"https://dealroom.so/glossary/caivrs-check","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"eligibility-criterion","url":"https://dealroom.so/glossary/eligibility-criterion"}]},{"slug":"sba-franchise-team","term":"SBA Franchise Team","group":"People and paperwork","definition":"This is the specialized team within the SBA that reviews franchise agreements to determine if a franchise is eligible for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/sba-franchise-team","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-review-portal","url":"https://dealroom.so/glossary/franchise-review-portal"}]},{"slug":"franchise-review-portal","term":"Franchise Review Portal","group":"People and paperwork","definition":"An online platform used by the SBA Franchise Team and lenders to manage the review process for franchise agreements, including submitting new agreements or checking existing approvals.","url":"https://dealroom.so/glossary/franchise-review-portal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"sba-franchise-team","url":"https://dealroom.so/glossary/sba-franchise-team"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"}]},{"slug":"collateral-assignment","term":"Collateral assignment","group":"Doing the deal","definition":"The legal transfer of rights to an asset, such as a life insurance policy, from you to the lender, to serve as collateral for the loan. The lender only gets these rights if you default.","url":"https://dealroom.so/glossary/collateral-assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"servicer-of-record","term":"Servicer of record","group":"People and paperwork","definition":"The entity, typically the originating bank or a third-party company, that is responsible for managing the day-to-day administration of your loan after it closes.","url":"https://dealroom.so/glossary/servicer-of-record","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-servicing","url":"https://dealroom.so/glossary/loan-servicing"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"loan-servicing","term":"Loan servicing","group":"Doing the deal","definition":"The ongoing process of administering a loan after it's been disbursed, including collecting payments, managing escrow, handling inquiries, and addressing defaults.","url":"https://dealroom.so/glossary/loan-servicing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicer-of-record","url":"https://dealroom.so/glossary/servicer-of-record"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"liquidation-action","term":"Liquidation action","group":"Doing the deal","definition":"What happens when an SBA loan defaults and the lender tries to recover the outstanding balance. For a buyer, understanding this process is crucial if a deal goes south, as it impacts collateral and guarantees.","url":"https://dealroom.so/glossary/liquidation-action","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"secondary-market-purchaser","term":"Secondary market purchaser","group":"People and paperwork","definition":"An entity that buys the guaranteed portion of your SBA loan from the originating lender. This practice helps lenders free up capital to make more loans, but it doesn't change your loan terms or who you make payments to.","url":"https://dealroom.so/glossary/secondary-market-purchaser","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"fiscal-and-transfer-agent","url":"https://dealroom.so/glossary/fiscal-and-transfer-agent"}]},{"slug":"repayment-term","term":"Repayment term","group":"The loan itself","definition":"The total time period, typically in years, over which you are scheduled to repay your SBA loan. A longer term usually means lower monthly payments but more total interest paid over the life of the loan.","url":"https://dealroom.so/glossary/repayment-term","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"interest-rate-adjustment","term":"Interest rate adjustment","group":"The loan itself","definition":"The change in your loan's interest rate over time if you have a variable rate loan. These adjustments are usually tied to an index like SOFR or Prime, impacting your monthly payment.","url":"https://dealroom.so/glossary/interest-rate-adjustment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"fixed-spread-sofr","url":"https://dealroom.so/glossary/fixed-spread-sofr"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"}]},{"slug":"debt-acceleration","term":"Debt acceleration","group":"Doing the deal","definition":"A clause in your loan agreement that allows the lender to demand immediate repayment of the entire outstanding loan balance if you default on certain terms. This is a severe consequence of non-compliance.","url":"https://dealroom.so/glossary/debt-acceleration","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"liquidation-action","url":"https://dealroom.so/glossary/liquidation-action"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"commercially-reasonable-manner","term":"Commercially reasonable manner","group":"Doing the deal","definition":"A legal standard requiring lenders to act in good faith and use sound business judgment when liquidating collateral after a loan default. It means they can't just give away your assets.","url":"https://dealroom.so/glossary/commercially-reasonable-manner","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation-action","url":"https://dealroom.so/glossary/liquidation-action"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"}]},{"slug":"sba-loan-specialist","term":"SBA loan specialist","group":"People and paperwork","definition":"A person at a bank or financial institution who specifically handles SBA-guaranteed loans. They are your primary contact for eligibility, application, and closing your 7(a) acquisition loan.","url":"https://dealroom.so/glossary/sba-loan-specialist","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"change-in-ownership","term":"Change in ownership","group":"Doing the deal","definition":"The transfer of control or a significant portion of a business's equity from one party to another. This is the core event in any business acquisition.","url":"https://dealroom.so/glossary/change-in-ownership","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"}]},{"slug":"loan-assumption","term":"Loan assumption","group":"Doing the deal","definition":"A buyer taking over the existing loan obligations of a business, rather than securing new financing. While rare with SBA loans, it can sometimes happen under specific circumstances.","url":"https://dealroom.so/glossary/loan-assumption","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"refinancing","url":"https://dealroom.so/glossary/refinancing"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"5-cs-of-credit","term":"5 Cs of credit","aka":"5 Cs","group":"Reading the business","definition":"A framework lenders use to evaluate a borrower's creditworthiness: Character, Capacity, Capital, Collateral, and Conditions. This is how lenders assess your ability to repay and the risk involved.","url":"https://dealroom.so/glossary/5-cs-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"projection","term":"Projection","aka":"Financial projections","group":"Reading the business","definition":"A forecast of a business's future financial performance, including revenue, expenses, and cash flow. Lenders heavily rely on these to assess the business's ability to repay your SBA loan.","url":"https://dealroom.so/glossary/projection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"fixed-spread-sofr","term":"Fixed Spread SOFR","group":"The loan itself","definition":"A common index used for variable interest rates on SBA 7(a) loans, consisting of the SOFR rate plus a fixed spread. This combination determines a portion of your actual interest rate.","url":"https://dealroom.so/glossary/fixed-spread-sofr","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"interest-rate-adjustment","url":"https://dealroom.so/glossary/interest-rate-adjustment"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"reset-period","term":"Reset period","group":"The loan itself","definition":"The frequency at which the variable interest rate on your SBA loan is adjusted. Common reset periods are monthly, quarterly, or semi-annually.","url":"https://dealroom.so/glossary/reset-period","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"interest-rate-adjustment","url":"https://dealroom.so/glossary/interest-rate-adjustment"},{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"fixed-spread-sofr","url":"https://dealroom.so/glossary/fixed-spread-sofr"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"prudent-lending-standard","term":"Prudent lending standard","aka":"Prudent lending standards","group":"Reading the business","definition":"The general requirement that lenders make sound, responsible loans based on established credit principles, even when backed by an SBA guaranty. It ensures the loan makes sense financially.","url":"https://dealroom.so/glossary/prudent-lending-standard","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"5-cs-of-credit","url":"https://dealroom.so/glossary/5-cs-of-credit"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"collateral-adequacy","term":"Collateral adequacy","group":"Reading the business","definition":"This refers to whether the value of the business's assets is sufficient to secure the SBA loan. As a buyer, you care because the SBA wants assurance that if the business fails, there are assets to cover the loan.","url":"https://dealroom.so/glossary/collateral-adequacy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"historical-financials","term":"Historical financials","group":"Reading the business","definition":"These are the past financial statements of the business, usually for the last three years. Buyers analyze them to understand the business's past performance and predict future profitability.","url":"https://dealroom.so/glossary/historical-financials","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"management-capacity","term":"Management capacity","group":"Reading the business","definition":"This assesses whether the buyer and the existing team have the skills and experience to successfully operate and grow the business. Lenders want assurance you can run the business profitably and repay the loan.","url":"https://dealroom.so/glossary/management-capacity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"speculative-activity","term":"Speculative activity","group":"Reading the business","definition":"This refers to business activities that involve a high degree of risk, like investing in volatile assets or real estate development for resale. The SBA generally does not lend to businesses primarily engaged in speculative activity.","url":"https://dealroom.so/glossary/speculative-activity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"source-and-seasoning-of-funds","term":"Source and seasoning of funds","group":"Your money in the deal","definition":"This refers to where your equity injection money came from and how long you've held it. The SBA wants to ensure your down payment is genuinely yours and not borrowed or a disguised loan.","url":"https://dealroom.so/glossary/source-and-seasoning-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"genuine-gift","term":"Genuine gift","group":"Your money in the deal","definition":"This is money given to the buyer for their equity injection that does not need to be repaid. The SBA allows gifts from immediate family, but they must be truly unconditional.","url":"https://dealroom.so/glossary/genuine-gift","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoning-of-funds","url":"https://dealroom.so/glossary/seasoning-of-funds"},{"slug":"familial-relationship","url":"https://dealroom.so/glossary/familial-relationship"}]},{"slug":"borrowed-funds","term":"Borrowed funds","group":"Your money in the deal","definition":"These are funds you've taken as a loan, often from a friend or relative, to contribute to your equity injection. The SBA has strict rules about using borrowed funds for your down payment.","url":"https://dealroom.so/glossary/borrowed-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"disguised-loan","term":"Disguised loan","group":"Your money in the deal","definition":"This refers to funds that appear to be equity injection but are actually a loan in disguise, often with an unwritten repayment expectation. The SBA strictly prohibits disguised loans as part of your down payment.","url":"https://dealroom.so/glossary/disguised-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"},{"slug":"borrowed-funds","url":"https://dealroom.so/glossary/borrowed-funds"}]},{"slug":"control-principle","term":"Control principle","group":"People and paperwork","definition":"This SBA rule defines who is considered an \"owner\" of a business based on their ability to control its operations. It impacts eligibility and who must personally guarantee the loan.","url":"https://dealroom.so/glossary/control-principle","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"blocking-right","url":"https://dealroom.so/glossary/blocking-right"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"blocking-right","term":"Blocking right","group":"Doing the deal","definition":"A blocking right is the power of a minority owner to prevent certain actions, even if they own less than 20% of the business. The SBA considers someone with a blocking right a key principal for personal guarantee purposes.","url":"https://dealroom.so/glossary/blocking-right","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"control-principle","url":"https://dealroom.so/glossary/control-principle"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"familial-relationship","term":"Familial relationship","group":"People and paperwork","definition":"This refers to family ties between individuals involved in the business acquisition. The SBA has rules around familial relationships to prevent conflicts of interest, especially regarding seller notes or gifts.","url":"https://dealroom.so/glossary/familial-relationship","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"genuine-gift","url":"https://dealroom.so/glossary/genuine-gift"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"permanent-resident-card","term":"Permanent Resident Card","aka":"Green card, Form I-551","group":"People and paperwork","definition":"This is a document issued by the U.S. government to Qualified Aliens authorizing them to live and work permanently in the United States. SBA loan applicants who are not U.S. citizens must hold a Permanent Resident Card.","url":"https://dealroom.so/glossary/permanent-resident-card","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"independent-appraiser","term":"Independent appraiser","aka":"Appraiser","group":"People and paperwork","definition":"This is a third-party professional hired to provide an unbiased valuation of business assets, real estate, or the business itself. The SBA requires valuations from an independent appraiser to ensure fair market value.","url":"https://dealroom.so/glossary/independent-appraiser","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"economically-feasible","term":"Economically feasible","group":"Reading the business","definition":"This means the business is projected to generate enough cash flow to cover all operating expenses and debt payments, including your SBA loan. Lenders must determine if the business is economically feasible before approving a loan.","url":"https://dealroom.so/glossary/economically-feasible","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"historical-financials","url":"https://dealroom.so/glossary/historical-financials"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"}]},{"slug":"second-lien","term":"Second lien","group":"The loan itself","definition":"A second lien is a claim on an asset that ranks behind a first lien, meaning the first lienholder gets paid back first if the asset is sold or foreclosed. For a buyer, this usually means more risk for the second lender and potentially higher interest rates.","url":"https://dealroom.so/glossary/second-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"lender-s-application-for-guaranty","term":"Lender's Application for Guaranty","aka":"SBA Form 1920","group":"People and paperwork","definition":"This is the form your lender submits to the SBA to request the federal guarantee on your loan. It details the loan terms, collateral, and borrower information.","url":"https://dealroom.so/glossary/lender-s-application-for-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"lender-certification","term":"Lender certification","group":"People and paperwork","definition":"This is a formal statement by your lender confirming they've met all SBA requirements for your loan. It's a crucial step before the SBA issues its guarantee.","url":"https://dealroom.so/glossary/lender-certification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"loan-officer","term":"Loan officer","group":"People and paperwork","definition":"This is the banking professional who guides you through the loan application process, helps structure your deal, and acts as your primary contact with the lending institution.","url":"https://dealroom.so/glossary/loan-officer","official_sources":[],"related":[{"slug":"lender","url":"https://dealroom.so/glossary/lender"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"internal-control","term":"Internal control","group":"Reading the business","definition":"Internal controls are the processes and procedures a business uses to safeguard assets, ensure accuracy of financial data, and promote operational efficiency. Strong controls reduce fraud risk.","url":"https://dealroom.so/glossary/internal-control","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"term-life-insurance","term":"Term life insurance","group":"The loan itself","definition":"This type of life insurance provides coverage for a specific period (the term), paying a death benefit if the insured dies within that term. It's often required by SBA lenders to protect the loan.","url":"https://dealroom.so/glossary/term-life-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"whole-life-insurance","url":"https://dealroom.so/glossary/whole-life-insurance"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"}]},{"slug":"whole-life-insurance","term":"Whole life insurance","group":"The loan itself","definition":"Whole life insurance provides lifelong coverage and includes a savings component that accumulates cash value over time. It's more expensive than term life insurance and generally not preferred by SBA lenders for loan collateral.","url":"https://dealroom.so/glossary/whole-life-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"term-life-insurance","url":"https://dealroom.so/glossary/term-life-insurance"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"loan-maturity","term":"Loan maturity","aka":"Term / maturity","group":"The loan itself","definition":"Loan maturity is the date when the final payment on a loan is due, and the loan is fully repaid. For 7(a) loans, this term is typically 10 years for business acquisitions.","url":"https://dealroom.so/glossary/loan-maturity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"loan-principal","url":"https://dealroom.so/glossary/loan-principal"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"lien-subordination","term":"Lien subordination","group":"Doing the deal","definition":"Lien subordination is an agreement where a lienholder agrees to place their claim on an asset behind another lienholder's claim. This changes the payment priority if the asset is sold.","url":"https://dealroom.so/glossary/lien-subordination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"second-lien","url":"https://dealroom.so/glossary/second-lien"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"fee-schedule","term":"Fee schedule","group":"The loan itself","definition":"A fee schedule lists all charges associated with your SBA loan, including origination fees, guaranty fees, and closing costs. Review it carefully to understand the total cost of financing.","url":"https://dealroom.so/glossary/fee-schedule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"capital-requirement","term":"Capital requirement","group":"Reading the business","definition":"The capital requirement refers to the amount of financial resources a business needs to operate, grow, and meet its obligations. It covers both fixed assets and working capital.","url":"https://dealroom.so/glossary/capital-requirement","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"balance-sheet-capacity","term":"Balance sheet capacity","group":"Reading the business","definition":"Balance sheet capacity refers to a company's ability to take on more debt or other liabilities without becoming overleveraged or financially unstable. It's about having sufficient assets and equity.","url":"https://dealroom.so/glossary/balance-sheet-capacity","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"},{"slug":"debt-to-income-ratio","url":"https://dealroom.so/glossary/debt-to-income-ratio"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"regulatory-capital-ratio","term":"Regulatory capital ratio","group":"Reading the business","definition":"This is a measure of a financial institution's capital relative to its risk-weighted assets, used by regulators to ensure banks have enough capital to absorb potential losses. This typically applies to the lender, not your target business.","url":"https://dealroom.so/glossary/regulatory-capital-ratio","official_sources":[],"related":[{"slug":"lender","url":"https://dealroom.so/glossary/lender"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"capital-requirement","url":"https://dealroom.so/glossary/capital-requirement"}]},{"slug":"loan-principal","term":"Loan principal","group":"The loan itself","definition":"The loan principal is the initial amount of money borrowed, excluding any interest or fees. Your monthly payments primarily go towards reducing this principal amount, plus accrued interest.","url":"https://dealroom.so/glossary/loan-principal","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"loan-maturity","url":"https://dealroom.so/glossary/loan-maturity"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"security-position","term":"Security position","group":"The loan itself","definition":"This refers to the lender's place in line to get paid back if the business defaults and assets are sold. A better security position means the lender gets paid before others.","url":"https://dealroom.so/glossary/security-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"public-sale","term":"Public sale","group":"Doing the deal","definition":"A sale of assets or a business conducted openly, often through an auction, to the highest bidder. This is typically done to recover funds from a defaulted loan.","url":"https://dealroom.so/glossary/public-sale","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"public-auction","url":"https://dealroom.so/glossary/public-auction"},{"slug":"competitive-bidding","url":"https://dealroom.so/glossary/competitive-bidding"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"private-sale","term":"Private sale","group":"Doing the deal","definition":"A sale of assets or a business negotiated directly between a seller and a specific buyer, without an open bidding process. This is common for small business acquisitions.","url":"https://dealroom.so/glossary/private-sale","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"prudent-lender","term":"Prudent lender","group":"People and paperwork","definition":"An SBA 7(a) lender who makes loans using sound and conservative lending practices, ensuring the loan is well-underwritten and has a reasonable chance of repayment.","url":"https://dealroom.so/glossary/prudent-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"good-faith","term":"Good faith","group":"Doing the deal","definition":"Acting honestly and fairly without intent to defraud or mislead. In a deal, it means all parties are genuinely trying to reach an agreement and fulfill their obligations.","url":"https://dealroom.so/glossary/good-faith","official_sources":[],"related":[{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"net-recovery","term":"Net recovery","group":"Doing the deal","definition":"The amount of money a lender ultimately recoups from a defaulted loan after deducting all costs associated with liquidation and collection.","url":"https://dealroom.so/glossary/net-recovery","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"public-auction","term":"Public auction","group":"Doing the deal","definition":"A type of public sale where assets are sold to the highest bidder in an open, competitive setting. This is often used for liquidating collateral from defaulted loans.","url":"https://dealroom.so/glossary/public-auction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"public-sale","url":"https://dealroom.so/glossary/public-sale"},{"slug":"competitive-bidding","url":"https://dealroom.so/glossary/competitive-bidding"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"competitive-bidding","term":"Competitive bidding","group":"Doing the deal","definition":"A process where multiple parties submit offers to buy an asset or business, with the seller typically choosing the highest or most favorable bid.","url":"https://dealroom.so/glossary/competitive-bidding","official_sources":[],"related":[{"slug":"public-sale","url":"https://dealroom.so/glossary/public-sale"},{"slug":"public-auction","url":"https://dealroom.so/glossary/public-auction"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"private-sale","url":"https://dealroom.so/glossary/private-sale"}]},{"slug":"affidavit","term":"Affidavit","group":"People and paperwork","definition":"A written statement of facts voluntarily made under oath or affirmation, typically before a notary public or other authorized officer.","url":"https://dealroom.so/glossary/affidavit","official_sources":[],"related":[{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"internal-audit","term":"Internal audit","group":"Reading the business","definition":"An independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps a business accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.","url":"https://dealroom.so/glossary/internal-audit","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"credit-memorandum","term":"Credit memorandum","group":"People and paperwork","definition":"A document issued by a seller to a buyer, reducing the amount the buyer owes, often due to returned goods, billing errors, or allowances.","url":"https://dealroom.so/glossary/credit-memorandum","official_sources":[],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"}]},{"slug":"sba-exposure","term":"SBA exposure","group":"The loan itself","definition":"This refers to the amount of potential financial loss the SBA faces on a particular loan if the borrower defaults. The SBA guarantees a percentage of the loan, not the full amount.","url":"https://dealroom.so/glossary/sba-exposure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"net-recovery","url":"https://dealroom.so/glossary/net-recovery"}]},{"slug":"subscription-agreement","term":"Subscription agreement","group":"People and paperwork","definition":"A legal contract between an investor and a company, outlining the terms and conditions under which the investor agrees to buy shares or ownership interests in the company.","url":"https://dealroom.so/glossary/subscription-agreement","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"market-value","term":"Market value","group":"Reading the business","definition":"The most probable price a property or business would bring in a competitive and open market under all conditions requisite to a fair sale.","url":"https://dealroom.so/glossary/market-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"}]},{"slug":"eligibility","term":"Eligibility","group":"Reading the business","definition":"What makes a business or borrower able to get an SBA loan. This is crucial for you to know early if the deal can even happen, as it dictates whether financing is possible.","url":"https://dealroom.so/glossary/eligibility","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-standards","url":"https://dealroom.so/glossary/credit-standards"},{"slug":"federal-debt-limits","url":"https://dealroom.so/glossary/federal-debt-limits"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"credit-standards","term":"Credit standards","group":"Reading the business","definition":"The lender's criteria for assessing the borrower's ability and willingness to repay the loan. Your personal and business financial health will be scrutinized against these standards.","url":"https://dealroom.so/glossary/credit-standards","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility","url":"https://dealroom.so/glossary/eligibility"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"records-search","term":"Records search","group":"Reading the business","definition":"A formal check for liens, judgments, and bankruptcies against the business or seller. It ensures you're buying assets free and clear, or that existing liens are properly released at closing.","url":"https://dealroom.so/glossary/records-search","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"life-insurance-collateral","term":"Life insurance collateral","group":"The loan itself","definition":"A life insurance policy on the borrower or key principal, assigned to the lender. It protects the lender if a key person dies before the loan is fully repaid, ensuring the loan is covered.","url":"https://dealroom.so/glossary/life-insurance-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"junior-lien-position","term":"Junior lien position","group":"The loan itself","definition":"When an SBA loan's collateral is secondary to another lender's claim in case of default. This means the other lender gets paid first from the collateral's sale proceeds.","url":"https://dealroom.so/glossary/junior-lien-position","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"secondary-market-audit","term":"Secondary market audit","group":"Doing the deal","definition":"An examination of a lender's SBA loans by a third-party or the SBA after the guaranteed portion has been sold to investors. It ensures compliance with SBA rules and proper loan servicing.","url":"https://dealroom.so/glossary/secondary-market-audit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"}]},{"slug":"material-servicing-action","term":"Material servicing action","group":"Doing the deal","definition":"A significant change to the loan terms or conditions after closing, requiring specific SBA approval. Examples include deferments, changes in collateral, or modifications to the guaranty.","url":"https://dealroom.so/glossary/material-servicing-action","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"deferment-period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"}]},{"slug":"sbss","term":"SBSS","aka":"Small Business Scoring Service","group":"Reading the business","definition":"The Small Business Scoring Service, a credit score used by lenders for smaller SBA loans, primarily 7(a) Small Loans. It quickly assesses creditworthiness based on business and personal data.","url":"https://dealroom.so/glossary/sbss","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"small-loan","url":"https://dealroom.so/glossary/small-loan"},{"slug":"credit-standards","url":"https://dealroom.so/glossary/credit-standards"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"small-loan","term":"Small Loan","group":"The loan itself","definition":"An SBA 7(a) loan for $500,000 or less, which often has a streamlined application and underwriting process. This is a common and efficient path for smaller business acquisitions.","url":"https://dealroom.so/glossary/small-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sbss","url":"https://dealroom.so/glossary/sbss"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"financial-ratios","term":"Financial ratios","group":"Reading the business","definition":"Calculations using a business's financial statements to assess its performance, health, and risk. Lenders use these to understand the business's ability to repay the loan.","url":"https://dealroom.so/glossary/financial-ratios","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"maximum-permitted-spread","term":"Maximum permitted spread","group":"The loan itself","definition":"The highest interest rate margin a lender can charge above the base rate (like WSJ Prime or SOFR) on an SBA loan. This limit is set by the SBA to protect borrowers.","url":"https://dealroom.so/glossary/maximum-permitted-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"federal-debt-limits","term":"Federal debt limits","group":"The loan itself","definition":"The maximum total amount of SBA loan debt a single borrower or affiliated group can have outstanding. This applies across all SBA programs, not just a single loan.","url":"https://dealroom.so/glossary/federal-debt-limits","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"eligibility","url":"https://dealroom.so/glossary/eligibility"}]},{"slug":"accountant-s-letter","term":"Accountant's letter","group":"People and paperwork","definition":"A letter from your accountant verifying your equity injection or other financial details. Lenders often require this to confirm your funds are 'seasoned' and legitimate.","url":"https://dealroom.so/glossary/accountant-s-letter","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"}]},{"slug":"retained-earnings","term":"Retained earnings","group":"Reading the business","definition":"The cumulative profits a business has kept rather than distributed to shareholders as dividends. It represents capital reinvested in the business, building its equity.","url":"https://dealroom.so/glossary/retained-earnings","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"capital-distribution","term":"Capital distribution","group":"Your money in the deal","definition":"Money paid out from a business to its owners or shareholders. As a buyer, you care about past distributions as they affect available cash flow and future distributions as part of your return.","url":"https://dealroom.so/glossary/capital-distribution","official_sources":[],"related":[{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"general-partner","term":"General partner","group":"People and paperwork","definition":"An owner in a partnership with full personal liability for the business's debts and obligations, and active management authority. This structure exposes personal assets to business risk.","url":"https://dealroom.so/glossary/general-partner","official_sources":[],"related":[{"slug":"limited-partner","url":"https://dealroom.so/glossary/limited-partner"},{"slug":"unlimited-liability","url":"https://dealroom.so/glossary/unlimited-liability"},{"slug":"personal-liability","url":"https://dealroom.so/glossary/personal-liability"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"limited-partner","term":"Limited partner","group":"People and paperwork","definition":"An owner in a limited partnership who contributes capital but has no management authority and liability is limited to their investment. They are passive investors.","url":"https://dealroom.so/glossary/limited-partner","official_sources":[],"related":[{"slug":"general-partner","url":"https://dealroom.so/glossary/general-partner"},{"slug":"unlimited-liability","url":"https://dealroom.so/glossary/unlimited-liability"},{"slug":"personal-liability","url":"https://dealroom.so/glossary/personal-liability"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"unlimited-liability","term":"Unlimited liability","group":"People and paperwork","definition":"A legal structure where an owner's personal assets are not protected from the business's debts and obligations. Creditors can pursue the owner's personal wealth.","url":"https://dealroom.so/glossary/unlimited-liability","official_sources":[],"related":[{"slug":"personal-liability","url":"https://dealroom.so/glossary/personal-liability"},{"slug":"general-partner","url":"https://dealroom.so/glossary/general-partner"},{"slug":"limited-partner","url":"https://dealroom.so/glossary/limited-partner"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"unresolved-judgment","term":"Unresolved judgment","group":"Reading the business","definition":"A court decision against an individual or business that hasn't been paid or satisfied. This indicates a past legal financial obligation that remains outstanding.","url":"https://dealroom.so/glossary/unresolved-judgment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-liability","url":"https://dealroom.so/glossary/personal-liability"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"}]},{"slug":"personal-liability","term":"Personal liability","group":"People and paperwork","definition":"The legal obligation of an individual for business debts and actions, meaning their personal assets can be seized to satisfy those obligations. This is a primary concern for business owners.","url":"https://dealroom.so/glossary/personal-liability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"unlimited-liability","url":"https://dealroom.so/glossary/unlimited-liability"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"speculative-business","term":"Speculative business","group":"The loan itself","definition":"A business whose success relies heavily on uncertain future events or market fluctuations rather than proven operational history. The SBA considers these ineligible for 7(a) loans.","url":"https://dealroom.so/glossary/speculative-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"start-up","url":"https://dealroom.so/glossary/start-up"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"owner-occupied","term":"Owner-occupied","group":"The loan itself","definition":"Describes commercial real estate where the business owner occupies and uses at least 51% of the property. This is a key requirement for SBA loans financing real estate.","url":"https://dealroom.so/glossary/owner-occupied","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"recapitalization","term":"Recapitalization","group":"Doing the deal","definition":"Restructuring a company's debt and equity mix, often to change the capital structure without changing ownership. It can involve issuing new stock or refinancing debt.","url":"https://dealroom.so/glossary/recapitalization","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"unencumbered-assets","term":"Unencumbered assets","group":"Reading the business","definition":"Assets that are free and clear of any liens, mortgages, or other legal claims. These assets can be used as collateral to secure a loan.","url":"https://dealroom.so/glossary/unencumbered-assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"private-equity-fund","term":"Private equity fund","group":"People and paperwork","definition":"A pooled investment vehicle that invests in private companies, often with the goal of improving operations and selling for a profit. They typically focus on larger deals.","url":"https://dealroom.so/glossary/private-equity-fund","official_sources":[],"related":[{"slug":"search-fund","url":"https://dealroom.so/glossary/search-fund"},{"slug":"general-partner","url":"https://dealroom.so/glossary/general-partner"},{"slug":"limited-partner","url":"https://dealroom.so/glossary/limited-partner"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"majority-equity-stake","term":"Majority equity stake","group":"Your money in the deal","definition":"Owning more than 50% of a company's shares or ownership interests, giving the holder controlling interest and decision-making power. This is typically required for SBA borrowers.","url":"https://dealroom.so/glossary/majority-equity-stake","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"foreign-national","term":"Foreign national","group":"People and paperwork","definition":"A person who is not a citizen of the country in which they are residing or conducting business. For SBA loans, their immigration status is critical.","url":"https://dealroom.so/glossary/foreign-national","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lpr","url":"https://dealroom.so/glossary/lpr"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"lpr","term":"LPR","aka":"Lawful Permanent Resident","group":"People and paperwork","definition":"A non-citizen who has been granted the right to live permanently in the U.S., often referred to as a 'Green Card' holder. LPRs are eligible for SBA loans.","url":"https://dealroom.so/glossary/lpr","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"foreign-national","url":"https://dealroom.so/glossary/foreign-national"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"ssn","term":"SSN","aka":"Social Security Number","group":"People and paperwork","definition":"Your SSN is a unique nine-digit number used by the U.S. government to track your earnings and identify you for tax purposes. Lenders use it to check your personal creditworthiness as a guarantor.","url":"https://dealroom.so/glossary/ssn","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"itin","term":"ITIN","aka":"Individual Taxpayer Identification Number","group":"People and paperwork","definition":"An ITIN is a tax processing number issued by the IRS for individuals who don't have an SSN but need to file U.S. tax returns. It serves a similar purpose for personal identification in loan applications.","url":"https://dealroom.so/glossary/itin","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"ssn","url":"https://dealroom.so/glossary/ssn"},{"slug":"taxpayer-identification-number","url":"https://dealroom.so/glossary/taxpayer-identification-number"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"}]},{"slug":"related-parties","term":"Related parties","group":"People and paperwork","definition":"Related parties are individuals or entities with a close relationship to the borrower or seller, such as family members or affiliated businesses. The SBA scrutinizes these relationships for potential conflicts.","url":"https://dealroom.so/glossary/related-parties","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"conflicts-of-interest","url":"https://dealroom.so/glossary/conflicts-of-interest"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"conflicts-of-interest","term":"Conflicts of interest","group":"People and paperwork","definition":"A conflict of interest arises when an individual's personal interests could potentially influence their professional judgment in a transaction. The SBA prohibits these to ensure fairness.","url":"https://dealroom.so/glossary/conflicts-of-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"related-parties","url":"https://dealroom.so/glossary/related-parties"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"purchase-money-security-interest","term":"Purchase money security interest","group":"Doing the deal","definition":"This is a specific type of security interest where the loan itself finances the acquisition of the collateral. 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If you don't meet these, you can't get the loan, so it's a critical first check.","url":"https://dealroom.so/glossary/borrower-eligibility","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"character-based-eligibility-criterion","url":"https://dealroom.so/glossary/character-based-eligibility-criterion"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"crime-of-moral-turpitude","term":"Crime of moral turpitude","group":"People and paperwork","definition":"A type of crime involving dishonesty, fraud, or depravity, which can disqualify you from getting an SBA loan. It's a key part of the SBA's character review.","url":"https://dealroom.so/glossary/crime-of-moral-turpitude","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"character-based-eligibility-criterion","url":"https://dealroom.so/glossary/character-based-eligibility-criterion"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"character-based-eligibility-criterion","term":"Character-based eligibility criterion","group":"The loan itself","definition":"A set of SBA rules that assess the honesty and integrity of a borrower and key principals. Past criminal history or certain financial issues can make you ineligible for a loan.","url":"https://dealroom.so/glossary/character-based-eligibility-criterion","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"borrower-eligibility","url":"https://dealroom.so/glossary/borrower-eligibility"},{"slug":"crime-of-moral-turpitude","url":"https://dealroom.so/glossary/crime-of-moral-turpitude"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"unexercised-option","term":"Unexercised option","group":"Reading the business","definition":"A right, but not an obligation, to buy or sell something (like shares or property) at a predetermined price, which has not yet been used. These can represent potential future claims on the business.","url":"https://dealroom.so/glossary/unexercised-option","official_sources":[],"related":[{"slug":"beneficial-interest","url":"https://dealroom.so/glossary/beneficial-interest"},{"slug":"business-acquisition","url":"https://dealroom.so/glossary/business-acquisition"},{"slug":"trust-agreement","url":"https://dealroom.so/glossary/trust-agreement"}]},{"slug":"revocable-grantor-trust","term":"Revocable grantor trust","group":"People and paperwork","definition":"A legal arrangement where the person who creates the trust (the grantor) can change or cancel it during their lifetime. Assets held in it are still considered owned by the grantor for tax purposes.","url":"https://dealroom.so/glossary/revocable-grantor-trust","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"grantor","url":"https://dealroom.so/glossary/grantor"},{"slug":"irrevocable-trust","url":"https://dealroom.so/glossary/irrevocable-trust"},{"slug":"trust-agreement","url":"https://dealroom.so/glossary/trust-agreement"},{"slug":"beneficial-interest","url":"https://dealroom.so/glossary/beneficial-interest"}]},{"slug":"grantor","term":"Grantor","group":"People and paperwork","definition":"The person or entity who creates a trust and transfers assets into it. They define the rules for how the trust's assets will be managed and distributed.","url":"https://dealroom.so/glossary/grantor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"revocable-grantor-trust","url":"https://dealroom.so/glossary/revocable-grantor-trust"},{"slug":"irrevocable-trust","url":"https://dealroom.so/glossary/irrevocable-trust"},{"slug":"trust-agreement","url":"https://dealroom.so/glossary/trust-agreement"},{"slug":"beneficial-interest","url":"https://dealroom.so/glossary/beneficial-interest"}]},{"slug":"irrevocable-trust","term":"Irrevocable trust","group":"People and paperwork","definition":"A trust that generally cannot be modified, amended, or terminated by the grantor after it's created. The grantor gives up control over the assets transferred into it.","url":"https://dealroom.so/glossary/irrevocable-trust","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"revocable-grantor-trust","url":"https://dealroom.so/glossary/revocable-grantor-trust"},{"slug":"grantor","url":"https://dealroom.so/glossary/grantor"},{"slug":"trust-agreement","url":"https://dealroom.so/glossary/trust-agreement"},{"slug":"beneficial-interest","url":"https://dealroom.so/glossary/beneficial-interest"}]},{"slug":"beneficial-interest","term":"Beneficial interest","group":"People and paperwork","definition":"The right to receive income or other benefits from a property or trust, even if legal title is held by someone else. The SBA needs to know who truly benefits from the business.","url":"https://dealroom.so/glossary/beneficial-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"revocable-grantor-trust","url":"https://dealroom.so/glossary/revocable-grantor-trust"},{"slug":"grantor","url":"https://dealroom.so/glossary/grantor"},{"slug":"irrevocable-trust","url":"https://dealroom.so/glossary/irrevocable-trust"},{"slug":"trust-agreement","url":"https://dealroom.so/glossary/trust-agreement"}]},{"slug":"trust-agreement","term":"Trust agreement","group":"People and paperwork","definition":"A legal document that establishes a trust, outlining its terms, the assets it holds, the beneficiaries, and the powers and duties of the trustee. This document determines who controls and benefits from trust assets.","url":"https://dealroom.so/glossary/trust-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"revocable-grantor-trust","url":"https://dealroom.so/glossary/revocable-grantor-trust"},{"slug":"grantor","url":"https://dealroom.so/glossary/grantor"},{"slug":"irrevocable-trust","url":"https://dealroom.so/glossary/irrevocable-trust"},{"slug":"beneficial-interest","url":"https://dealroom.so/glossary/beneficial-interest"}]},{"slug":"business-acquisition","term":"Business acquisition","group":"Doing the deal","definition":"The process of buying an existing business, including its assets, liabilities, and operations. This is the goal of your 7(a) loan.","url":"https://dealroom.so/glossary/business-acquisition","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"amendment-to-loan-authorization","term":"Amendment to Loan Authorization","group":"The loan itself","definition":"A formal modification to the original SBA Loan Authorization document, changing specific terms or conditions of your approved loan. This is required if any details change after initial approval.","url":"https://dealroom.so/glossary/amendment-to-loan-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"proprietor","term":"Proprietor","group":"People and paperwork","definition":"An individual who owns and operates a business by themselves, without a separate legal entity. They are personally responsible for all business debts and liabilities.","url":"https://dealroom.so/glossary/proprietor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"officer","url":"https://dealroom.so/glossary/officer"}]},{"slug":"partner","term":"Partner","group":"People and paperwork","definition":"An individual who co-owns a business with one or more others, typically sharing profits, losses, and management responsibilities. 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If you're buying a sub-franchisor, you need to understand these agreements as they govern your relationship with your franchisees.","url":"https://dealroom.so/glossary/sub-franchise-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"sub-franchisor","url":"https://dealroom.so/glossary/sub-franchisor"},{"slug":"master-franchise-agreement","url":"https://dealroom.so/glossary/master-franchise-agreement"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"}]},{"slug":"environmental-permit","term":"Environmental permit","group":"Reading the business","definition":"An environmental permit is official permission from a government agency to operate a business activity that might impact the environment. 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As a buyer, you must identify potential contamination risks because cleanup costs can be enormous and fall on the new owner.","url":"https://dealroom.so/glossary/soil-and-groundwater-contamination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"}]},{"slug":"additional-guarantor","term":"Additional guarantor","group":"People and paperwork","definition":"An additional guarantor is someone who provides a personal guarantee for a loan, beyond the primary business owners. 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Buyers interested in businesses with international sales can use this for working capital or trade show financing up to $500,000.","url":"https://dealroom.so/glossary/export-express","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"export-loan-program","url":"https://dealroom.so/glossary/export-loan-program"},{"slug":"international-trade-loan","url":"https://dealroom.so/glossary/international-trade-loan"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"international-trade-loan","term":"International Trade Loan","group":"The loan itself","definition":"The International Trade Loan is an SBA program providing larger loans to businesses that are expanding into international markets or have been negatively affected by foreign competition. 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The SBA offers specific incentives and reduced fees for loans to acquire or operate these businesses, which can lower your overall deal costs.","url":"https://dealroom.so/glossary/veteran-owned-business","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"debt-compromise","term":"Debt compromise","group":"Doing the deal","definition":"Debt compromise is an agreement where a lender accepts a lower amount than what is originally owed to settle a debt. If the business you're buying has outstanding debts, a compromise might reduce your inherited liabilities.","url":"https://dealroom.so/glossary/debt-compromise","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"unconditional-guarantee","term":"Unconditional guarantee","aka":"Unconditional guaranty","group":"People and paperwork","definition":"An unconditional guarantee is a promise to pay a debt without requiring the lender to first try and collect from the primary borrower. 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It's a major red flag because it could lead to fines, legal issues, or even business closure, impacting your investment.","url":"https://dealroom.so/glossary/material-non-compliance","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"residential-zoning","term":"Residential zoning","group":"Reading the business","definition":"This is a local rule limiting land use to homes. If the business operates on such land, it's likely illegal or grandfathered in, which is a significant risk for a buyer.","url":"https://dealroom.so/glossary/residential-zoning","official_sources":[],"related":[{"slug":"zoning-restriction","url":"https://dealroom.so/glossary/zoning-restriction"},{"slug":"local-zoning-ordinance","url":"https://dealroom.so/glossary/local-zoning-ordinance"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"zoning-restriction","term":"Zoning restriction","group":"Reading the business","definition":"A zoning restriction is a rule governing how specific land can be used. These restrictions dictate what types of businesses can operate and what structures can be built, directly affecting your plans for the business.","url":"https://dealroom.so/glossary/zoning-restriction","official_sources":[],"related":[{"slug":"residential-zoning","url":"https://dealroom.so/glossary/residential-zoning"},{"slug":"local-zoning-ordinance","url":"https://dealroom.so/glossary/local-zoning-ordinance"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"local-zoning-ordinance","term":"Local zoning ordinance","group":"Reading the business","definition":"These are specific laws set by local governments that control how land and buildings can be used in different areas. They directly impact where and how a business can operate.","url":"https://dealroom.so/glossary/local-zoning-ordinance","official_sources":[],"related":[{"slug":"residential-zoning","url":"https://dealroom.so/glossary/residential-zoning"},{"slug":"zoning-restriction","url":"https://dealroom.so/glossary/zoning-restriction"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"government-contracts","term":"Government contracts","group":"Reading the business","definition":"These are agreements where the business provides goods or services to federal, state, or local government entities. They can be stable revenue, but come with strict rules and potential risks.","url":"https://dealroom.so/glossary/government-contracts","official_sources":[],"related":[{"slug":"federal-assignment-of-claims-act","url":"https://dealroom.so/glossary/federal-assignment-of-claims-act"},{"slug":"assignment-of-claims","url":"https://dealroom.so/glossary/assignment-of-claims"},{"slug":"revenue-concentration","url":"https://dealroom.so/glossary/revenue-concentration"}]},{"slug":"federal-assignment-of-claims-act","term":"Federal Assignment of Claims Act","aka":"FACA","group":"People and paperwork","definition":"This federal law dictates how payments from government contracts can be assigned to a third party, like a lender. It's critical for securing your SBA loan if government receivables are part of the collateral.","url":"https://dealroom.so/glossary/federal-assignment-of-claims-act","official_sources":[],"related":[{"slug":"government-contracts","url":"https://dealroom.so/glossary/government-contracts"},{"slug":"assignment-of-claims","url":"https://dealroom.so/glossary/assignment-of-claims"},{"slug":"contracting-officer","url":"https://dealroom.so/glossary/contracting-officer"},{"slug":"disbursing-officer","url":"https://dealroom.so/glossary/disbursing-officer"}]},{"slug":"assignment-of-claims","term":"Assignment of claims","group":"Doing the deal","definition":"This is a legal transfer of the right to receive payment from a contract to another party, often a lender. It's how your lender secures their interest in the business's receivables.","url":"https://dealroom.so/glossary/assignment-of-claims","official_sources":[],"related":[{"slug":"federal-assignment-of-claims-act","url":"https://dealroom.so/glossary/federal-assignment-of-claims-act"},{"slug":"government-contracts","url":"https://dealroom.so/glossary/government-contracts"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"}]},{"slug":"contracting-officer","term":"Contracting officer","group":"People and paperwork","definition":"This is the government official authorized to enter into, administer, and terminate contracts on behalf of the government. They are key if the business has government contracts.","url":"https://dealroom.so/glossary/contracting-officer","official_sources":[],"related":[{"slug":"federal-assignment-of-claims-act","url":"https://dealroom.so/glossary/federal-assignment-of-claims-act"},{"slug":"government-contracts","url":"https://dealroom.so/glossary/government-contracts"},{"slug":"disbursing-officer","url":"https://dealroom.so/glossary/disbursing-officer"}]},{"slug":"disbursing-officer","term":"Disbursing officer","group":"People and paperwork","definition":"This is the government official responsible for making payments on government contracts. They are crucial for ensuring payments are directed correctly after an assignment of claims.","url":"https://dealroom.so/glossary/disbursing-officer","official_sources":[],"related":[{"slug":"federal-assignment-of-claims-act","url":"https://dealroom.so/glossary/federal-assignment-of-claims-act"},{"slug":"government-contracts","url":"https://dealroom.so/glossary/government-contracts"},{"slug":"contracting-officer","url":"https://dealroom.so/glossary/contracting-officer"},{"slug":"assignment-of-claims","url":"https://dealroom.so/glossary/assignment-of-claims"}]},{"slug":"surety","term":"Surety","group":"People and paperwork","definition":"A surety is a third party who guarantees that someone else's obligation will be fulfilled. In the context of an SBA loan, it's typically the government backing a portion of the loan.","url":"https://dealroom.so/glossary/surety","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"passive-real-estate-business","term":"Passive real estate business","group":"The loan itself","definition":"This is a business whose primary activity is owning and renting real estate, with little to no active management or services provided. SBA loans generally do not fund these types of businesses.","url":"https://dealroom.so/glossary/passive-real-estate-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"agricultural-cooperative","term":"Agricultural cooperative","group":"The loan itself","definition":"This is an organization owned and operated by its members, typically farmers, to provide shared services like processing or marketing agricultural products. These are generally eligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/agricultural-cooperative","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"for-profit-entity","url":"https://dealroom.so/glossary/for-profit-entity"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"}]},{"slug":"for-profit-entity","term":"For-profit entity","group":"The loan itself","definition":"This is a business designed to generate profits for its owners. The SBA 7(a) loan program is exclusively for these types of businesses, not non-profits.","url":"https://dealroom.so/glossary/for-profit-entity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"revenue-concentration","term":"Revenue concentration","group":"Reading the business","definition":"This occurs when a large portion of a business's revenue comes from a small number of customers or a single product/service. It's a risk because losing one major client can severely impact cash flow.","url":"https://dealroom.so/glossary/revenue-concentration","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"government-contracts","url":"https://dealroom.so/glossary/government-contracts"}]},{"slug":"franchise-eligibility-review","term":"Franchise Eligibility Review","group":"The loan itself","definition":"This is the SBA's process to confirm a franchise system is approved for 7(a) loans. If the franchise isn't on the SBA Franchise Directory, your loan process stops until it's reviewed.","url":"https://dealroom.so/glossary/franchise-eligibility-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"loan-maturity-extension","term":"Loan Maturity Extension","aka":"Extension of the loan maturity date","group":"The loan itself","definition":"This is when the SBA allows a lender to extend the repayment period of an existing 7(a) loan. It's rare for new acquisitions, but relevant for refinancing.","url":"https://dealroom.so/glossary/loan-maturity-extension","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"circular-financing","term":"Circular Financing","group":"The loan itself","definition":"This is when the seller or an affiliate provides funds for your equity injection or uses loan proceeds to repay their own debt. It's strictly prohibited by the SBA.","url":"https://dealroom.so/glossary/circular-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"relending","url":"https://dealroom.so/glossary/relending"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"primary-beneficiary","term":"Primary Beneficiary","group":"People and paperwork","definition":"This is the person or entity designated to receive the proceeds from a life insurance policy. For SBA loans, the lender is often named the primary beneficiary.","url":"https://dealroom.so/glossary/primary-beneficiary","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"consignment","term":"Consignment","aka":"Selling on consignment","group":"Reading the business","definition":"This is an arrangement where a seller (consignor) provides goods to a retailer (consignee) to sell, but the consignor retains ownership until the goods are sold.","url":"https://dealroom.so/glossary/consignment","official_sources":[],"related":[{"slug":"consignment-agreement","url":"https://dealroom.so/glossary/consignment-agreement"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"cost-of-goods-sold","term":"Cost of Goods Sold","group":"Reading the business","definition":"This is the direct cost of producing the goods sold by a business, including raw materials, direct labor, and manufacturing overhead. It's a key factor in gross profit.","url":"https://dealroom.so/glossary/cost-of-goods-sold","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"consignment-agreement","term":"Consignment Agreement","group":"People and paperwork","definition":"This is a formal contract outlining the terms between a consignor (owner) and a consignee (seller) for goods sold on consignment.","url":"https://dealroom.so/glossary/consignment-agreement","official_sources":[],"related":[{"slug":"consignment","url":"https://dealroom.so/glossary/consignment"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"change-of-ownership-transaction","term":"Change-of-Ownership Transaction","group":"Doing the deal","definition":"This refers to the purchase of an existing business, where ownership transfers from a seller to a buyer. It's the most common type of SBA 7(a) loan.","url":"https://dealroom.so/glossary/change-of-ownership-transaction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"assumption-of-existing-sba-loan","term":"Assumption of Existing SBA Loan","group":"Doing the deal","definition":"This is when a buyer takes over the seller's existing SBA loan, becoming responsible for its repayment under the original terms. It's rarely allowed by the SBA.","url":"https://dealroom.so/glossary/assumption-of-existing-sba-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"operating-business","term":"Operating Business","group":"The loan itself","definition":"This is a business that is actively engaged in commercial activity, producing goods or services, and generating revenue. The SBA generally only lends to these.","url":"https://dealroom.so/glossary/operating-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"start-up","url":"https://dealroom.so/glossary/start-up"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"relending","term":"Relending","group":"The loan itself","definition":"This is using SBA loan proceeds to provide funds to another business or individual, which is a prohibited use of funds.","url":"https://dealroom.so/glossary/relending","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"circular-financing","url":"https://dealroom.so/glossary/circular-financing"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"serious-criminal-offense","term":"Serious Criminal Offense","group":"People and paperwork","definition":"This refers to certain felonies or crimes of moral turpitude that can make a loan applicant ineligible for an SBA loan.","url":"https://dealroom.so/glossary/serious-criminal-offense","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"misdemeanor","url":"https://dealroom.so/glossary/misdemeanor"},{"slug":"supervised-release","url":"https://dealroom.so/glossary/supervised-release"},{"slug":"look-back-period","url":"https://dealroom.so/glossary/look-back-period"}]},{"slug":"supervised-release","term":"Supervised Release","group":"People and paperwork","definition":"This is a period of community supervision that follows a prison sentence, similar to parole. Being on supervised release makes you ineligible for an SBA loan.","url":"https://dealroom.so/glossary/supervised-release","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"serious-criminal-offense","url":"https://dealroom.so/glossary/serious-criminal-offense"},{"slug":"look-back-period","url":"https://dealroom.so/glossary/look-back-period"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"look-back-period","term":"Look-Back Period","group":"People and paperwork","definition":"This is the specific timeframe the SBA reviews an applicant's criminal history to determine eligibility for a loan. It's typically one year for certain offenses.","url":"https://dealroom.so/glossary/look-back-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"serious-criminal-offense","url":"https://dealroom.so/glossary/serious-criminal-offense"},{"slug":"supervised-release","url":"https://dealroom.so/glossary/supervised-release"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"closing-disclosure","term":"Closing Disclosure","group":"People and paperwork","definition":"This is a detailed five-page form that provides final details about your loan. It includes the loan terms, projected monthly payments, and how much you'll pay in fees and other costs to get your mortgage.","url":"https://dealroom.so/glossary/closing-disclosure","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"hud-1","term":"HUD-1","group":"People and paperwork","definition":"The HUD-1 Settlement Statement is a standard form that itemizes all charges imposed on a borrower and seller for a real estate transaction. It provides a complete picture of all costs associated with the deal.","url":"https://dealroom.so/glossary/hud-1","official_sources":[],"related":[{"slug":"closing-disclosure","url":"https://dealroom.so/glossary/closing-disclosure"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"}]},{"slug":"divestitures","term":"Divestitures","group":"Doing the deal","definition":"Divestitures are when a company sells off an asset, a subsidiary, or a portion of its business. For buyers, it means you're acquiring a carve-out of a larger entity, not the whole company.","url":"https://dealroom.so/glossary/divestitures","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"non-immigrant-visa","term":"Non-immigrant visa","group":"People and paperwork","definition":"A non-immigrant visa allows foreign nationals to temporarily enter the U.S. for specific purposes, such as tourism, work, or study. For buyers, it's crucial if you or key personnel are not U.S. citizens or permanent residents.","url":"https://dealroom.so/glossary/non-immigrant-visa","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"}]},{"slug":"representations-and-warranties","term":"Representations and warranties","group":"Doing the deal","definition":"These are statements of fact made by the seller about the business at the time of sale, backed by a promise that they are true. They protect you if the business isn't as described.","url":"https://dealroom.so/glossary/representations-and-warranties","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"second-lien-position","term":"Second lien position","group":"Doing the deal","definition":"This means another lender has a claim on the collateral that is subordinate to the first lien holder. If the business defaults, the second lien holder gets paid only after the first lien is satisfied.","url":"https://dealroom.so/glossary/second-lien-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"uspto","term":"USPTO","aka":"U.S. Patent and Trademark Office","group":"People and paperwork","definition":"This federal agency grants patents to inventors and registers trademarks for products and services. It's where you check if the business's intellectual property is protected.","url":"https://dealroom.so/glossary/uspto","official_sources":[],"related":[{"slug":"u-s-copyright-office","url":"https://dealroom.so/glossary/u-s-copyright-office"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"u-s-copyright-office","term":"U.S. Copyright Office","group":"People and paperwork","definition":"This federal office registers copyrights for original works of authorship, such as software, books, and music. It's the place to confirm ownership and protection for creative business assets.","url":"https://dealroom.so/glossary/u-s-copyright-office","official_sources":[],"related":[{"slug":"uspto","url":"https://dealroom.so/glossary/uspto"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"ucc-1-filing","term":"UCC-1 filing","aka":"Uniform Commercial Code-1 filing","group":"Doing the deal","definition":"This is a public notice filed by a creditor to establish a legal claim (Lien) on a debtor's personal property used as Collateral. It signals who has priority if the debtor defaults.","url":"https://dealroom.so/glossary/ucc-1-filing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"assignment-agreement","term":"Assignment agreement","group":"People and paperwork","definition":"This is a legal document that transfers rights, property, or obligations from one party (the assignor) to another (the assignee). It's common in business sales for contracts and leases.","url":"https://dealroom.so/glossary/assignment-agreement","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"credit-memos","term":"Credit memos","group":"Reading the business","definition":"These are documents issued by a seller to a buyer, reducing the amount the buyer owes, often for returns, allowances, or billing errors. They impact revenue reporting.","url":"https://dealroom.so/glossary/credit-memos","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"}]},{"slug":"lender-liability","term":"Lender liability","group":"People and paperwork","definition":"This refers to the potential legal responsibility a lender might incur for bad faith, fraud, or wrongful actions in its dealings with a borrower. It protects borrowers from abusive lending practices.","url":"https://dealroom.so/glossary/lender-liability","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"leasehold-improvements","term":"Leasehold improvements","group":"Reading the business","definition":"These are modifications made to a leased property by the tenant to suit their business needs. They are assets that typically revert to the landlord at the end of the lease.","url":"https://dealroom.so/glossary/leasehold-improvements","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"environmental-risk-assessment","term":"Environmental risk assessment","group":"Reading the business","definition":"This is a review of a property to identify potential environmental contamination or hazards. It's required for commercial real estate transactions and SBA loans involving real estate.","url":"https://dealroom.so/glossary/environmental-risk-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"certificate-of-incumbency","term":"Certificate of Incumbency","group":"People and paperwork","definition":"This document certifies who the current officers of a corporation are and verifies their authority to act on behalf of the company. It's essential for proving that the person signing legal documents for the seller is authorized to do so.","url":"https://dealroom.so/glossary/certificate-of-incumbency","official_sources":[],"related":[{"slug":"corporate-guarantor","url":"https://dealroom.so/glossary/corporate-guarantor"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"deferment-of-payments","term":"Deferment of Payments","group":"The loan itself","definition":"This is a temporary pause in your loan payments, usually granted during financial hardship. While it sounds appealing, it's rare for an acquisition loan and typically only offered in severe, unforeseen circumstances.","url":"https://dealroom.so/glossary/deferment-of-payments","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"corporate-guarantor","term":"Corporate Guarantor","group":"People and paperwork","definition":"A Corporate Guarantor is a business entity that agrees to be responsible for the loan if the primary borrower defaults. If your acquisition vehicle is a separate entity, it may be required to guarantee the loan.","url":"https://dealroom.so/glossary/corporate-guarantor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"insurance-endorsement","term":"Insurance Endorsement","group":"People and paperwork","definition":"An insurance endorsement is an amendment to an existing insurance policy that changes its terms or scope. Lenders often require specific endorsements to protect their interest in the collateral.","url":"https://dealroom.so/glossary/insurance-endorsement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"credit-scoring-model","term":"Credit Scoring Model","group":"Reading the business","definition":"This is a statistical tool used by lenders to assess the creditworthiness of a loan applicant based on various financial data points. For small SBA loans, your personal credit score and the business's credit profile are critical.","url":"https://dealroom.so/glossary/credit-scoring-model","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"sbss-score","url":"https://dealroom.so/glossary/sbss-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"material-alteration","term":"Material Alteration","group":"Doing the deal","definition":"A material alteration is a significant change to the terms or conditions of a loan or the structure of the business after the loan has been approved. Such changes often require lender and SBA approval.","url":"https://dealroom.so/glossary/material-alteration","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"collateral-package","term":"Collateral Package","group":"Doing the deal","definition":"This refers to all the assets pledged to secure an SBA loan, ensuring the lender can recover funds if you default. It typically includes business assets and, if needed, personal assets.","url":"https://dealroom.so/glossary/collateral-package","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-1","url":"https://dealroom.so/glossary/ucc-1"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"sensitivity-analysis","term":"Sensitivity Analysis","group":"Reading the business","definition":"This financial modeling technique assesses how changes in key variables impact a business's financial outcomes. It helps you understand the risks associated with different assumptions about the business's future performance.","url":"https://dealroom.so/glossary/sensitivity-analysis","official_sources":[],"related":[{"slug":"stress-testing","url":"https://dealroom.so/glossary/stress-testing"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"stress-testing","term":"Stress-Testing","group":"Reading the business","definition":"Stress-testing is a rigorous form of financial analysis that evaluates a business's ability to withstand adverse economic conditions or significant operational challenges. It simulates worst-case scenarios.","url":"https://dealroom.so/glossary/stress-testing","official_sources":[],"related":[{"slug":"sensitivity-analysis","url":"https://dealroom.so/glossary/sensitivity-analysis"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"ucc-1","term":"UCC-1","aka":"Uniform Commercial Code financing statement","group":"People and paperwork","definition":"A UCC-1, or Uniform Commercial Code financing statement, is a public notice filed by a lender to establish their legal claim on specific collateral. This filing ensures the lender has priority over other creditors if the borrower defaults.","url":"https://dealroom.so/glossary/ucc-1","official_sources":[],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"factor","term":"Factor","group":"Reading the business","definition":"In business valuation, a factor is a multiplier applied to a company's earnings or revenue to estimate its market value. Different industries and business types have varying factors.","url":"https://dealroom.so/glossary/factor","official_sources":[],"related":[{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"passive-income","term":"Passive Income","group":"Reading the business","definition":"Passive income is money earned from an enterprise in which one is not actively involved, such as rental properties or investments. The SBA has rules against funding businesses that primarily generate passive income.","url":"https://dealroom.so/glossary/passive-income","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"disguised-seller-financing","term":"Disguised Seller Financing","group":"Your money in the deal","definition":"This occurs when seller financing is structured to appear as equity, a gift, or another form of capital to circumvent SBA's standby requirements for seller notes. The SBA rigorously scrutinizes transactions for this.","url":"https://dealroom.so/glossary/disguised-seller-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"equipment-lease","term":"Equipment Lease","group":"The loan itself","definition":"An equipment lease is a contract to rent equipment for a specified period, rather than buying it outright. Existing leases on essential equipment will impact the business's cash flow and your debt service capacity.","url":"https://dealroom.so/glossary/equipment-lease","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"collateral-pool","term":"Collateral Pool","group":"The loan itself","definition":"The total assets the lender can seize if you default on your SBA loan. Since SBA loans require all available business and personal assets as collateral, this pool is often broad.","url":"https://dealroom.so/glossary/collateral-pool","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"perfect-security-interest","url":"https://dealroom.so/glossary/perfect-security-interest"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"sba-fee-schedule","term":"SBA Fee Schedule","aka":"Upfront guaranty fee","group":"The loan itself","definition":"The set of fees the SBA charges lenders for their guarantee, which lenders typically pass on to you as the borrower. These fees vary based on the loan amount and maturity.","url":"https://dealroom.so/glossary/sba-fee-schedule","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"borrower-s-environmental-questionnaire","term":"Borrower's Environmental Questionnaire","aka":"Environmental Questionnaire","group":"People and paperwork","definition":"A form you complete for the lender to identify potential environmental risks associated with the business property. It's an initial screen for contamination or hazardous materials.","url":"https://dealroom.so/glossary/borrower-s-environmental-questionnaire","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"}]},{"slug":"extenuating-circumstance","term":"Extenuating Circumstance","group":"Doing the deal","definition":"An unusual, unforeseen event that justifies an exception to standard loan program rules or policy. It's a rare allowance for unique situations.","url":"https://dealroom.so/glossary/extenuating-circumstance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-amendment","url":"https://dealroom.so/glossary/loan-amendment"},{"slug":"eligibility-certification","url":"https://dealroom.so/glossary/eligibility-certification"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"layering-of-debt","term":"Layering of Debt","group":"The loan itself","definition":"Occurs when additional debt is introduced into the capital structure of a business that already has an SBA loan. The SBA generally restricts this to protect its lien position.","url":"https://dealroom.so/glossary/layering-of-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"shared-economic-interest","term":"Shared Economic Interest","group":"People and paperwork","definition":"When individuals or entities stand to gain financially from the same business or transaction. The SBA uses this to determine affiliation and eligibility.","url":"https://dealroom.so/glossary/shared-economic-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"joint-venture","url":"https://dealroom.so/glossary/joint-venture"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"eligibility-certification","url":"https://dealroom.so/glossary/eligibility-certification"}]},{"slug":"joint-venture","term":"Joint Venture","group":"People and paperwork","definition":"A business arrangement where two or more parties collaborate on a specific project or business activity, sharing profits and risks. It's a temporary partnership for a defined purpose.","url":"https://dealroom.so/glossary/joint-venture","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"shared-economic-interest","url":"https://dealroom.so/glossary/shared-economic-interest"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"eligibility-certification","url":"https://dealroom.so/glossary/eligibility-certification"}]},{"slug":"enhanced-due-diligence","term":"Enhanced Due Diligence","group":"Reading the business","definition":"A more intensive and detailed investigation into a business beyond standard due diligence. It's typically triggered by red flags or specific risks identified during the initial review.","url":"https://dealroom.so/glossary/enhanced-due-diligence","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"perfect-security-interest","term":"Perfect Security Interest","group":"The loan itself","definition":"A legal claim on collateral that has been properly established and recorded, making it enforceable against third parties. This protects the lender's right to seize assets if you default.","url":"https://dealroom.so/glossary/perfect-security-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"}]},{"slug":"personal-property","term":"Personal Property","group":"The loan itself","definition":"Moveable assets of a business or individual, distinct from real estate. This includes things like equipment, inventory, vehicles, and accounts receivable.","url":"https://dealroom.so/glossary/personal-property","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"}]},{"slug":"loan-amendment","term":"Loan Amendment","aka":"Amended SBA Loan Authorization","group":"Doing the deal","definition":"A formal change or modification to the original terms and conditions of your loan agreement. It requires approval from both you and the lender, and sometimes the SBA.","url":"https://dealroom.so/glossary/loan-amendment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"eligibility-certification","term":"Eligibility Certification","group":"People and paperwork","definition":"A formal statement confirming that you and your business meet all the SBA's requirements to receive a 7(a) loan. It's a critical part of your loan application.","url":"https://dealroom.so/glossary/eligibility-certification","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"caivrs-database","term":"CAIVRS Database","aka":"Credit Alert Interactive Voice Response System","group":"People and paperwork","definition":"A federal database used by lenders to check if a borrower has defaulted on or has an outstanding federal debt, including prior SBA loans. It's a mandatory check for federal programs.","url":"https://dealroom.so/glossary/caivrs-database","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"federal-debt-delinquency","url":"https://dealroom.so/glossary/federal-debt-delinquency"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"federal-debt-delinquency","term":"Federal Debt Delinquency","aka":"Defaults on federal debt","group":"Reading the business","definition":"Being behind on payments or having defaulted on a loan or debt owed to the U.S. government. This can include prior SBA loans, student loans, or tax debts.","url":"https://dealroom.so/glossary/federal-debt-delinquency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"caivrs-database","url":"https://dealroom.so/glossary/caivrs-database"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"eligibility-certification","url":"https://dealroom.so/glossary/eligibility-certification"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"collateral-assignment-of-life-insurance","term":"Collateral Assignment of Life Insurance","group":"The loan itself","definition":"A requirement for key principals to assign a life insurance policy to the lender. It protects the lender if the principal dies before the loan is repaid, ensuring the loan gets paid off.","url":"https://dealroom.so/glossary/collateral-assignment-of-life-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"ach-debit","term":"ACH Debit","group":"Doing the deal","definition":"An electronic payment withdrawal from your bank account. SBA loan payments are typically set up this way for automatic, reliable payments, simplifying your monthly obligations.","url":"https://dealroom.so/glossary/ach-debit","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"holder-of-record","term":"Holder of Record","group":"People and paperwork","definition":"The official owner of a security or asset, as recorded in the company's books or with a transfer agent. This confirms who legally owns what in an acquisition.","url":"https://dealroom.so/glossary/holder-of-record","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"unilateral-servicing-authority","term":"Unilateral Servicing Authority","group":"Doing the deal","definition":"A lender's ability to take certain actions regarding an SBA loan without prior SBA approval. This streamlines routine loan administration and speeds up minor adjustments.","url":"https://dealroom.so/glossary/unilateral-servicing-authority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"disposition","term":"Disposition","group":"Doing the deal","definition":"The sale or disposal of collateral assets, typically after a loan default, to recover funds for the lender. It's the final stage if a loan cannot be repaid.","url":"https://dealroom.so/glossary/disposition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"mai-appraisal","term":"MAI Appraisal","group":"Reading the business","definition":"An appraisal of commercial real estate performed by a Member of the Appraisal Institute (MAI), indicating a higher standard of expertise. It provides a reliable valuation for property collateral.","url":"https://dealroom.so/glossary/mai-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"broker-price-opinion","term":"Broker Price Opinion","group":"Reading the business","definition":"An estimate of a property's value by a real estate broker, less formal than an appraisal. Lenders might use it for initial assessments or for smaller, non-real estate collateral.","url":"https://dealroom.so/glossary/broker-price-opinion","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"equipment-appraisal","term":"Equipment Appraisal","group":"Reading the business","definition":"A professional valuation of a business's machinery and equipment. It determines the fair market value and liquidation value of these assets, which are often pledged as collateral.","url":"https://dealroom.so/glossary/equipment-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"liquidation-expense","term":"Liquidation Expense","group":"Doing the deal","definition":"Costs incurred by the lender when selling collateral after a loan default. 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It's regulated by the SBA to ensure fair pricing for borrowers.","url":"https://dealroom.so/glossary/allowable-spread","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"pro-forma-cash-flow-analysis","term":"Pro Forma Cash Flow Analysis","group":"Reading the business","definition":"A projection of a business's future cash inflows and outflows, assuming certain events like an acquisition. It helps evaluate the business's ability to generate future cash to service debt.","url":"https://dealroom.so/glossary/pro-forma-cash-flow-analysis","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"negative-debt-service-coverage","term":"Negative Debt Service Coverage","group":"Reading the business","definition":"When a business's cash flow is insufficient to cover its debt payments. This is a critical red flag for lenders and indicates a high risk of default.","url":"https://dealroom.so/glossary/negative-debt-service-coverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"commodity","term":"Commodity","group":"Reading the business","definition":"A basic good or raw material that is interchangeable with other goods of the same type. For a buyer, selling a commodity means you compete primarily on price, making it harder to differentiate your business.","url":"https://dealroom.so/glossary/commodity","official_sources":[],"related":[{"slug":"profit-margin","url":"https://dealroom.so/glossary/profit-margin"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"}]},{"slug":"totality-of-the-circumstances-rule","term":"Totality of the circumstances rule","group":"People and paperwork","definition":"An SBA principle where all relevant factors are considered together to determine if an affiliation exists, not just one isolated factor. This matters because affiliation can impact a business's eligibility for an SBA loan.","url":"https://dealroom.so/glossary/totality-of-the-circumstances-rule","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"undue-control","url":"https://dealroom.so/glossary/undue-control"},{"slug":"legal-entity","url":"https://dealroom.so/glossary/legal-entity"}]},{"slug":"change-of-ownership-loan","term":"Change-of-ownership loan","group":"The loan itself","definition":"An SBA 7(a) loan specifically designed to finance the purchase of an existing business. This is the primary type of loan buyers use to acquire small businesses.","url":"https://dealroom.so/glossary/change-of-ownership-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"retained-equity","term":"Retained equity","group":"Your money in the deal","definition":"The portion of the seller's ownership in the business that they keep after the sale. This is uncommon in SBA 7(a) deals, as the SBA generally requires a complete change of ownership.","url":"https://dealroom.so/glossary/retained-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"undue-control","url":"https://dealroom.so/glossary/undue-control"},{"slug":"operational-control","url":"https://dealroom.so/glossary/operational-control"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"operational-control","term":"Operational control","group":"People and paperwork","definition":"The ability to direct the day-to-day management and decision-making of a business. The SBA requires the buyer to have this, ensuring they are truly running the acquired business.","url":"https://dealroom.so/glossary/operational-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"undue-control","url":"https://dealroom.so/glossary/undue-control"},{"slug":"totality-of-the-circumstances-rule","url":"https://dealroom.so/glossary/totality-of-the-circumstances-rule"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"legal-entity","url":"https://dealroom.so/glossary/legal-entity"}]},{"slug":"personal-real-estate-collateral","term":"Personal real estate collateral","group":"The loan itself","definition":"Your personal home or other real estate you own that is pledged to secure a portion of the SBA loan. The SBA requires this if there's a collateral shortfall and you have sufficient unencumbered equity.","url":"https://dealroom.so/glossary/personal-real-estate-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"}]},{"slug":"undue-control","term":"Undue control","group":"People and paperwork","definition":"When a seller or other party maintains too much influence over a business after a sale, which can be an SBA eligibility issue. The SBA requires the buyer to have full operational control.","url":"https://dealroom.so/glossary/undue-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"operational-control","url":"https://dealroom.so/glossary/operational-control"},{"slug":"totality-of-the-circumstances-rule","url":"https://dealroom.so/glossary/totality-of-the-circumstances-rule"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"profit-margin","term":"Profit margin","group":"Reading the business","definition":"The percentage of revenue that turns into profit after expenses. A healthy profit margin indicates efficient operations and pricing power, which is critical for debt service.","url":"https://dealroom.so/glossary/profit-margin","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"environmental-investigation","term":"Environmental investigation","group":"Reading the business","definition":"A review of a property's current and historical uses to identify potential environmental risks, such as contamination. This is often required for SBA loans on real estate.","url":"https://dealroom.so/glossary/environmental-investigation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"hazardous-substance","url":"https://dealroom.so/glossary/hazardous-substance"},{"slug":"contamination","url":"https://dealroom.so/glossary/contamination"}]},{"slug":"hazardous-substance","term":"Hazardous substance","group":"Reading the business","definition":"Any material that can pose a risk to human health or the environment, such as chemicals, petroleum, or asbestos. Discovering these on a property can create significant liabilities for a buyer.","url":"https://dealroom.so/glossary/hazardous-substance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-investigation","url":"https://dealroom.so/glossary/environmental-investigation"},{"slug":"contamination","url":"https://dealroom.so/glossary/contamination"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"contamination","term":"Contamination","group":"Reading the business","definition":"The presence of hazardous substances in soil, water, or air at levels that could harm human health or the environment. This is a major red flag during due diligence.","url":"https://dealroom.so/glossary/contamination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-investigation","url":"https://dealroom.so/glossary/environmental-investigation"},{"slug":"hazardous-substance","url":"https://dealroom.so/glossary/hazardous-substance"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"waiver","term":"Waiver","group":"Doing the deal","definition":"A voluntary surrender of a known right or claim, often in writing. In a deal, a waiver might be requested by one party to overlook a specific condition or requirement.","url":"https://dealroom.so/glossary/waiver","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-document","url":"https://dealroom.so/glossary/loan-document"},{"slug":"legal-entity","url":"https://dealroom.so/glossary/legal-entity"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"legal-entity","term":"Legal entity","group":"People and paperwork","definition":"A business structure recognized by law (e.g., LLC, Corporation, Partnership) that can enter into contracts, own assets, and incur liabilities independently. You'll form one to acquire the business.","url":"https://dealroom.so/glossary/legal-entity","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"loan-document","url":"https://dealroom.so/glossary/loan-document"}]},{"slug":"loan-document","term":"Loan document","group":"People and paperwork","definition":"The complete set of legal agreements that define the terms and conditions of your SBA loan, including the promissory note, security agreements, and personal guarantee.","url":"https://dealroom.so/glossary/loan-document","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"note","url":"https://dealroom.so/glossary/note"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"collateral-agreement","term":"Collateral agreement","group":"People and paperwork","definition":"This is a legal document formalizing your pledge of specific assets as security for a loan. If you default, the lender can seize these assets to recover their money.","url":"https://dealroom.so/glossary/collateral-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"loan-obligation","term":"Loan obligation","group":"The loan itself","definition":"This refers to the total amount of money you are legally bound to repay, including the principal, interest, and any associated fees, over the loan's term. It's your complete debt burden.","url":"https://dealroom.so/glossary/loan-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"term-loan","url":"https://dealroom.so/glossary/term-loan"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"post-closing-review","term":"Post-closing review","group":"Doing the deal","definition":"This is when the lender, or often the SBA itself, reviews the loan file after closing to ensure all regulations, policies, and conditions were met. 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This typically comes from owning a majority of voting shares.","url":"https://dealroom.so/glossary/board-control","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"sba-guarantee","term":"SBA guarantee","group":"The loan itself","definition":"This is a promise from the Small Business Administration to reimburse the lender for a portion of the loan principal if you default. 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They are revolving lines of credit.","url":"https://dealroom.so/glossary/caplines","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"standard-7-a-loan","url":"https://dealroom.so/glossary/standard-7-a-loan"},{"slug":"seasonal-business","url":"https://dealroom.so/glossary/seasonal-business"}]},{"slug":"standard-7-a-loan","term":"Standard 7(a) loan","group":"The loan itself","definition":"This is the SBA's primary loan program, offering flexible financing for a wide range of small business needs, including acquisitions, working capital, and real estate. It's the most common loan for buying a business.","url":"https://dealroom.so/glossary/standard-7-a-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guarantee","url":"https://dealroom.so/glossary/sba-guarantee"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"term-loan","term":"Term loan","group":"The loan itself","definition":"A term loan is a lump sum of money lent for a specific period (the \"term\"), repaid in regular installments with interest. 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These loans often have stricter requirements.","url":"https://dealroom.so/glossary/conventional-financing","official_sources":[],"related":[{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"variable-rate-margin","term":"Variable rate margin","group":"The loan itself","definition":"This is the fixed percentage added to a base rate (like WSJ Prime or Term SOFR) to determine your loan's variable interest rate. It's a key factor in your monthly payments.","url":"https://dealroom.so/glossary/variable-rate-margin","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"guarantee-impairment","term":"Guarantee impairment","group":"The loan itself","definition":"This occurs when a lender fails to follow SBA rules, potentially reducing or canceling the SBA's guarantee on your loan. It means the lender might be on the hook for more of the loss if you default.","url":"https://dealroom.so/glossary/guarantee-impairment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"qualified-rollover","term":"Qualified rollover","aka":"Retirement account rollover","group":"Your money in the deal","definition":"This is a way to use funds from your retirement accounts (like 401(k) or IRA) without immediate tax penalties to fund your equity injection. It's a common strategy for buyers.","url":"https://dealroom.so/glossary/qualified-rollover","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"}]},{"slug":"cash-equity","term":"Cash equity","group":"Your money in the deal","definition":"This is the portion of your down payment that comes directly from your personal cash or seasoned funds, not from other loans or retirement rollovers. It's a fundamental part of your equity injection.","url":"https://dealroom.so/glossary/cash-equity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"asset-sale","term":"Asset sale","group":"Doing the deal","definition":"In an asset sale, you buy specific assets (equipment, inventory, goodwill) of a business, not the legal entity itself. This is the most common structure for small business acquisitions.","url":"https://dealroom.so/glossary/asset-sale","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"employment-income","term":"Employment income","group":"Reading the business","definition":"This refers to the wages, salaries, and other compensation paid to employees for their work. It's a major operating expense for most businesses.","url":"https://dealroom.so/glossary/employment-income","official_sources":[],"related":[{"slug":"payroll","url":"https://dealroom.so/glossary/payroll"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"uspap","term":"USPAP","aka":"Uniform Standards of Professional Appraisal Practice","group":"Reading the business","definition":"These are the widely accepted quality control standards for professional appraisals in the United States. They ensure appraisals are unbiased and reliable.","url":"https://dealroom.so/glossary/uspap","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"commercial-real-estate-appraisal","url":"https://dealroom.so/glossary/commercial-real-estate-appraisal"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraiser","url":"https://dealroom.so/glossary/appraiser"}]},{"slug":"commercial-real-estate-appraisal","term":"Commercial real estate appraisal","group":"Reading the business","definition":"This is a professional valuation of a commercial property, determining its fair market value based on various factors. It's critical if the business owns its real estate.","url":"https://dealroom.so/glossary/commercial-real-estate-appraisal","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"uspap","url":"https://dealroom.so/glossary/uspap"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"personal-credit-history","term":"Personal credit history","group":"Reading the business","definition":"This is a record of your past borrowing and repayment behavior, detailing your debts, payment patterns, and any derogatory marks. Lenders use it to assess your creditworthiness.","url":"https://dealroom.so/glossary/personal-credit-history","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-credit-score","url":"https://dealroom.so/glossary/personal-credit-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"}]},{"slug":"personal-credit-score","term":"Personal credit score","group":"Reading the business","definition":"A numerical summary (like FICO) derived from your credit history, indicating your credit risk to lenders. A higher score generally means lower risk.","url":"https://dealroom.so/glossary/personal-credit-score","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-credit-history","url":"https://dealroom.so/glossary/personal-credit-history"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"inventory-turnover-rate","term":"Inventory turnover rate","group":"Reading the business","definition":"This ratio measures how many times a business sells and replaces its inventory over a period. A healthy rate indicates efficient sales and inventory management.","url":"https://dealroom.so/glossary/inventory-turnover-rate","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"useful-economic-life","term":"Useful economic life","group":"Reading the business","definition":"This is the estimated period an asset is expected to be productive and generate revenue for a business. It's distinct from its physical life.","url":"https://dealroom.so/glossary/useful-economic-life","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"payroll","term":"Payroll","group":"Reading the business","definition":"This refers to the total compensation a business pays to its employees, including salaries, wages, bonuses, and taxes withheld. It's a significant and recurring expense.","url":"https://dealroom.so/glossary/payroll","official_sources":[],"related":[{"slug":"employment-income","url":"https://dealroom.so/glossary/employment-income"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"rent","term":"Rent","group":"Reading the business","definition":"The regular payment made to a landlord for the use of property, typically a commercial space. It's a fixed operating expense for many businesses.","url":"https://dealroom.so/glossary/rent","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"utilities","term":"Utilities","group":"Reading the business","definition":"These are essential services like electricity, water, and gas. They are a recurring operating cost that directly impacts a business's profitability and cash flow.","url":"https://dealroom.so/glossary/utilities","official_sources":[],"related":[{"slug":"business-expense","url":"https://dealroom.so/glossary/business-expense"},{"slug":"general-overhead","url":"https://dealroom.so/glossary/general-overhead"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"general-overhead","term":"General overhead","group":"Reading the business","definition":"These are ongoing business expenses not directly tied to producing goods or services, like rent, administrative salaries, and office supplies. They are fixed costs essential for operations.","url":"https://dealroom.so/glossary/general-overhead","official_sources":[],"related":[{"slug":"business-expense","url":"https://dealroom.so/glossary/business-expense"},{"slug":"utilities","url":"https://dealroom.so/glossary/utilities"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"short-term-liquidity","term":"Short-term liquidity","group":"Reading the business","definition":"This refers to a business's ability to meet its immediate financial obligations, typically within one year, using easily convertible assets. It indicates financial health and operational stability.","url":"https://dealroom.so/glossary/short-term-liquidity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"}]},{"slug":"outstanding-federal-taxes","term":"Outstanding federal taxes","group":"Reading the business","definition":"These are unpaid tax liabilities owed to the federal government, such as income or payroll taxes. Unresolved tax issues can create significant liabilities for a buyer.","url":"https://dealroom.so/glossary/outstanding-federal-taxes","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"federal-obligation","url":"https://dealroom.so/glossary/federal-obligation"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"federal-obligation","term":"Federal obligation","group":"Reading the business","definition":"This is any debt or duty owed to the U.S. federal government, including taxes, fines, or loan defaults. It can prevent a business or individual from receiving new federal assistance.","url":"https://dealroom.so/glossary/federal-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"outstanding-federal-taxes","url":"https://dealroom.so/glossary/outstanding-federal-taxes"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"}]},{"slug":"environmental-standard","term":"Environmental standard","group":"Reading the business","definition":"These are rules or requirements designed to protect the environment, often related to waste disposal, emissions, or hazardous materials. Non-compliance can lead to severe fines and liabilities.","url":"https://dealroom.so/glossary/environmental-standard","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"personal-debt","term":"Personal debt","group":"Reading the business","definition":"This is money owed by an individual, not the business, such as mortgages, car loans, or credit card balances. It impacts your personal financial statement and global cash flow.","url":"https://dealroom.so/glossary/personal-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"business-expense","term":"Business expense","group":"Reading the business","definition":"These are costs incurred by a business to generate revenue, ranging from salaries and rent to supplies and marketing. Understanding these is crucial for assessing profitability.","url":"https://dealroom.so/glossary/business-expense","official_sources":[],"related":[{"slug":"general-overhead","url":"https://dealroom.so/glossary/general-overhead"},{"slug":"utilities","url":"https://dealroom.so/glossary/utilities"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"business-plan-review","term":"Business plan review","group":"Reading the business","definition":"This is the process of evaluating a detailed document outlining your business's goals, strategies, and financial projections. It's essential for lenders to assess viability.","url":"https://dealroom.so/glossary/business-plan-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"non-profit-entity","term":"Non-profit entity","group":"People and paperwork","definition":"This is an organization operating for a collective, public, or social benefit, not for the financial gain of its members. They are generally ineligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/non-profit-entity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"for-profit-small-business","url":"https://dealroom.so/glossary/for-profit-small-business"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"small-business-concern","url":"https://dealroom.so/glossary/small-business-concern"}]},{"slug":"for-profit-small-business","term":"For-profit small business","group":"People and paperwork","definition":"This is a privately-owned business whose primary goal is to generate profit for its owners. It is the fundamental type of entity eligible for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/for-profit-small-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"small-business-concern","url":"https://dealroom.so/glossary/small-business-concern"},{"slug":"non-profit-entity","url":"https://dealroom.so/glossary/non-profit-entity"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"small-business-concern","term":"Small business concern","group":"People and paperwork","definition":"This is the specific term the SBA uses to define an eligible business, based on industry-specific size standards (revenue or employee count). Meeting this definition is crucial for SBA loan eligibility.","url":"https://dealroom.so/glossary/small-business-concern","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"for-profit-small-business","url":"https://dealroom.so/glossary/for-profit-small-business"}]},{"slug":"income-producing-real-estate","term":"Income-producing real estate","group":"Reading the business","definition":"This refers to property owned for the purpose of generating rental income. While often a good investment, it's generally not directly eligible for an SBA 7(a) loan unless it's owner-occupied.","url":"https://dealroom.so/glossary/income-producing-real-estate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"trade-or-business","term":"Trade or business","group":"People and paperwork","definition":"This term refers to any activity carried on for livelihood or profit. For SBA purposes, it must be an operating, for-profit entity, not passive investments.","url":"https://dealroom.so/glossary/trade-or-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"for-profit-small-business","url":"https://dealroom.so/glossary/for-profit-small-business"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"small-business-concern","url":"https://dealroom.so/glossary/small-business-concern"}]},{"slug":"industry-analysis","term":"Industry analysis","group":"Reading the business","definition":"What's the market like for this business? You need to understand the industry's health, trends, and competitive landscape to gauge the business's long-term viability and growth potential.","url":"https://dealroom.so/glossary/industry-analysis","official_sources":[],"related":[{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"affiliated-group","term":"Affiliated group","aka":"Affiliation","group":"Reading the business","definition":"This refers to businesses that are connected through ownership, management, or contractual relationships. The SBA combines the revenues and employees of all affiliated businesses to determine if a business meets the size standard for a 7(a) loan.","url":"https://dealroom.so/glossary/affiliated-group","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"control","url":"https://dealroom.so/glossary/control"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"alternative-size-standard","url":"https://dealroom.so/glossary/alternative-size-standard"}]},{"slug":"control","term":"Control","group":"Reading the business","definition":"The SBA defines control as the power to direct the management and policies of a business. This is crucial for determining affiliation and eligibility for an SBA loan.","url":"https://dealroom.so/glossary/control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliated-group","url":"https://dealroom.so/glossary/affiliated-group"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"franchise-rule","term":"Franchise rule","group":"The loan itself","definition":"The SBA has specific rules for how franchise businesses can qualify for 7(a) loans. It's not just about the business itself, but the franchise agreement's terms.","url":"https://dealroom.so/glossary/franchise-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"}]},{"slug":"tangible-net-worth","term":"Tangible net worth","group":"Reading the business","definition":"This is a measure of a business's net worth, excluding intangible assets like goodwill. Lenders use it to assess financial health, particularly for businesses seeking larger loans.","url":"https://dealroom.so/glossary/tangible-net-worth","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"alternative-size-standard","term":"Alternative size standard","group":"The loan itself","definition":"This is an alternate eligibility test for businesses that exceed the standard size limits (revenue or employees) but still need SBA loan access.","url":"https://dealroom.so/glossary/alternative-size-standard","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"tangible-net-worth","url":"https://dealroom.so/glossary/tangible-net-worth"}]},{"slug":"carryover-losses","term":"Carryover losses","group":"Reading the business","definition":"These are business operating losses from prior years that can be used to offset future taxable income, reducing the business's tax burden.","url":"https://dealroom.so/glossary/carryover-losses","official_sources":[],"related":[{"slug":"fiscal-years","url":"https://dealroom.so/glossary/fiscal-years"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"fiscal-years","term":"Fiscal years","group":"Reading the business","definition":"A 12-month accounting period a business uses for financial reporting and tax purposes. 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The SBA allows these structures to separate property ownership from business operations.","url":"https://dealroom.so/glossary/eligible-passive-company","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"sba-regulations","term":"SBA regulations","group":"The loan itself","definition":"These are the rules set by the Small Business Administration that govern all aspects of 7(a) loans, from borrower eligibility to loan terms and lender procedures. You must meet these to get funding.","url":"https://dealroom.so/glossary/sba-regulations","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"eligible-passive-company","url":"https://dealroom.so/glossary/eligible-passive-company"}]},{"slug":"plan-administrator","term":"Plan administrator","group":"People and paperwork","definition":"This is the individual or entity responsible for managing and overseeing an employee benefit plan, such as a 401(k) or pension plan. 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Losing them can significantly impact value.","url":"https://dealroom.so/glossary/key-employees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"officers","url":"https://dealroom.so/glossary/officers"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"}]},{"slug":"audited-financial-statements","term":"Audited financial statements","group":"Reading the business","definition":"These are financial reports (P&L, Balance Sheet, Cash Flow) that have been reviewed and verified by an independent CPA. They offer the highest level of assurance regarding financial accuracy.","url":"https://dealroom.so/glossary/audited-financial-statements","official_sources":[],"related":[{"slug":"tax-returns","url":"https://dealroom.so/glossary/tax-returns"},{"slug":"interim-financial-statements","url":"https://dealroom.so/glossary/interim-financial-statements"},{"slug":"cpa","url":"https://dealroom.so/glossary/cpa"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"tax-returns","term":"Tax returns","group":"Reading the business","definition":"These are official documents filed with tax authorities, reporting a business's income, expenses, and taxes owed. They are crucial for verifying reported revenues and profits.","url":"https://dealroom.so/glossary/tax-returns","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"audited-financial-statements","url":"https://dealroom.so/glossary/audited-financial-statements"},{"slug":"interim-financial-statements","url":"https://dealroom.so/glossary/interim-financial-statements"},{"slug":"cpa","url":"https://dealroom.so/glossary/cpa"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"h-1b","term":"H-1B","group":"People and paperwork","definition":"This is a non-immigrant visa that allows U.S. employers to temporarily employ foreign workers in specialty occupations. 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It's common in real estate, but rare for SBA loans.","url":"https://dealroom.so/glossary/assuming-the-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"franchise-business","term":"Franchise business","group":"Reading the business","definition":"A business operating under a license from a franchisor, using their brand, system, and support. This structure comes with specific operating rules and fees.","url":"https://dealroom.so/glossary/franchise-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"sba-regulations","url":"https://dealroom.so/glossary/sba-regulations"}]},{"slug":"interim-financial-statements","term":"Interim financial statements","group":"Reading the business","definition":"These are financial reports covering periods shorter than a full fiscal year, such as monthly or quarterly statements. 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It shows the core operating profitability for a new owner.","url":"https://dealroom.so/glossary/adjusted-ebitda","official_sources":[],"related":[{"slug":"discretionary-expenses","url":"https://dealroom.so/glossary/discretionary-expenses"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"income-statements","term":"Income Statements","group":"Reading the business","definition":"These financial reports show a business's revenue, costs, and profit or loss over a specific period. They are critical for understanding historical performance and profitability.","url":"https://dealroom.so/glossary/income-statements","official_sources":[],"related":[{"slug":"normalized-cash-flow","url":"https://dealroom.so/glossary/normalized-cash-flow"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"normalized-cash-flow","term":"Normalized Cash Flow","group":"Reading the business","definition":"This is a business's true operating cash flow, adjusted for non-recurring items and discretionary owner expenses. It's the primary metric used for valuing a small business.","url":"https://dealroom.so/glossary/normalized-cash-flow","official_sources":[],"related":[{"slug":"income-statements","url":"https://dealroom.so/glossary/income-statements"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"complete-change-of-ownership","term":"Complete Change of Ownership","group":"Doing the deal","definition":"This refers to the transfer of 100% of the ownership interest in a business from the seller to the buyer. It's the standard structure for SBA 7(a) acquisitions.","url":"https://dealroom.so/glossary/complete-change-of-ownership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"loan-eligibility","url":"https://dealroom.so/glossary/loan-eligibility"}]},{"slug":"first-mortgage","term":"First Mortgage","group":"Doing the deal","definition":"This is the primary lien on real estate, giving the holder the highest claim on the property if the borrower defaults. For SBA loans, this is usually held by the lender.","url":"https://dealroom.so/glossary/first-mortgage","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"assignment-of-the-security-interest","term":"Assignment of the Security Interest","group":"Doing the deal","definition":"This is the formal transfer of a lender's legal claim on collateral to another party, often the SBA. It ensures the SBA can step in if the lender fails to perform.","url":"https://dealroom.so/glossary/assignment-of-the-security-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"}]},{"slug":"unsecured-position","term":"Unsecured Position","group":"The loan itself","definition":"This refers to a loan or a portion of a loan that is not backed by specific collateral. The lender relies on the borrower's creditworthiness and repayment capacity.","url":"https://dealroom.so/glossary/unsecured-position","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"guaranty-purchase-review","term":"Guaranty Purchase Review","group":"The loan itself","definition":"This is the SBA's process of reviewing a defaulted loan to determine if it will honor its guarantee to the lender. It occurs if the loan goes bad.","url":"https://dealroom.so/glossary/guaranty-purchase-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"sba-form-912","term":"SBA Form 912","aka":"Statement of Personal History","group":"People and paperwork","definition":"This mandatory form, also known as the Statement of Personal History, requires all principals of an SBA loan applicant to disclose personal background information, including criminal history and past federal debt defaults.","url":"https://dealroom.so/glossary/sba-form-912","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"loan-eligibility","term":"Loan Eligibility","group":"The loan itself","definition":"These are the specific criteria a business, its owners, and the proposed loan purpose must meet to qualify for an SBA 7(a) loan. It's the first major hurdle for financing.","url":"https://dealroom.so/glossary/loan-eligibility","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"negotiated-addendum","term":"Negotiated Addendum","group":"Doing the deal","definition":"A separate document that modifies or adds specific terms to an existing agreement, such as a purchase agreement or loan document, after its initial drafting.","url":"https://dealroom.so/glossary/negotiated-addendum","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"borrower","term":"Borrower","group":"People and paperwork","definition":"The individual or entity legally obligated to repay the loan. In an SBA acquisition, this is typically the acquiring business entity.","url":"https://dealroom.so/glossary/borrower","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"servicing-agreement","term":"Servicing Agreement","group":"The loan itself","definition":"A contract outlining the responsibilities of a loan servicer, who manages all aspects of a loan after it closes, including collecting payments and handling defaults.","url":"https://dealroom.so/glossary/servicing-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"payment-deferment-period","term":"Payment Deferment Period","group":"The loan itself","definition":"A temporary period during which the borrower is not required to make principal or interest payments on a loan. This can offer a buffer during the initial takeover.","url":"https://dealroom.so/glossary/payment-deferment-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"substitution-of-collateral","term":"Substitution of Collateral","group":"Doing the deal","definition":"The act of replacing one piece of collateral pledged for a loan with another of equal or greater value, subject to lender and SBA approval.","url":"https://dealroom.so/glossary/substitution-of-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"prudent-liquidation","term":"Prudent Liquidation","group":"The loan itself","definition":"This refers to the lender's obligation to minimize losses when a defaulted SBA loan is collected. They must show they acted responsibly to recover as much as possible from collateral and guarantors.","url":"https://dealroom.so/glossary/prudent-liquidation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"demand-letters","term":"Demand Letters","group":"Doing the deal","definition":"These are formal notices from a creditor requesting payment for a defaulted debt. They precede legal action and are a critical step in debt collection.","url":"https://dealroom.so/glossary/demand-letters","official_sources":[],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"loan-instruments","term":"Loan Instruments","group":"The loan itself","definition":"These are the legal documents that define the terms of your loan, including the promissory note, security agreements, and guaranty agreements. They legally bind you to the loan's repayment.","url":"https://dealroom.so/glossary/loan-instruments","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"note","url":"https://dealroom.so/glossary/note"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"post-closing","term":"Post-Closing","group":"Doing the deal","definition":"This refers to the period immediately after the loan closing when final documentation, filings, and fund disbursements are completed. It ensures all conditions set by the lender are met.","url":"https://dealroom.so/glossary/post-closing","official_sources":[],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"alternative-base-rates","term":"Alternative Base Rates","group":"The loan itself","definition":"These are benchmark interest rates, like Term SOFR or LIBOR (phasing out), that lenders use to calculate the variable interest rate on your SBA loan. Your actual rate is this base rate plus a \"spread.\"","url":"https://dealroom.so/glossary/alternative-base-rates","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"base-rate-index","url":"https://dealroom.so/glossary/base-rate-index"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"perfected-security-interest","term":"Perfected Security Interest","group":"Doing the deal","definition":"This means the lender has taken all necessary legal steps to establish their claim to your collateral, making it enforceable against other creditors in case of default. It gives them priority.","url":"https://dealroom.so/glossary/perfected-security-interest","official_sources":[],"related":[{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"}]},{"slug":"guaranty-percentage","term":"Guaranty Percentage","group":"The loan itself","definition":"This is the portion of a defaulted SBA loan that the SBA guarantees to pay the lender. It's usually 75-90% for a 7(a) loan, limiting the lender's risk.","url":"https://dealroom.so/glossary/guaranty-percentage","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"industry-specific-size-standards","term":"Industry-Specific Size Standards","group":"The loan itself","definition":"These are maximum revenue or employee thresholds set by the SBA for a business to qualify as \"small\" within its industry. Your target business must meet these to be eligible for an SBA loan.","url":"https://dealroom.so/glossary/industry-specific-size-standards","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"caivrs","term":"CAIVRS","aka":"Credit Alert Interactive Voice Response System","group":"People and paperwork","definition":"This is a federal database that identifies individuals with delinquent federal debt, like defaulted student loans or prior federal loan defaults. Lenders check this for all key principals.","url":"https://dealroom.so/glossary/caivrs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"phase-ii","term":"Phase II","aka":"Phase II Environmental Site Assessment","group":"Reading the business","definition":"This is an intrusive environmental study, including soil and water testing, conducted when a Phase I assessment identifies potential contamination (Recognized Environmental Conditions).","url":"https://dealroom.so/glossary/phase-ii","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"}]},{"slug":"base-rate-index","term":"Base Rate Index","group":"The loan itself","definition":"This is the specific benchmark interest rate, such as WSJ Prime or Term SOFR, that an SBA loan's variable interest rate is tied to. Your loan rate is this index plus a lender's spread.","url":"https://dealroom.so/glossary/base-rate-index","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"alternative-base-rates","url":"https://dealroom.so/glossary/alternative-base-rates"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"}]},{"slug":"zoning-ordinance","term":"Zoning Ordinance","group":"Reading the business","definition":"These are local laws that regulate land use and development within a municipality, dictating what types of businesses or activities are permitted in specific areas.","url":"https://dealroom.so/glossary/zoning-ordinance","official_sources":[],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"interest-rate-caps","term":"Interest Rate Caps","group":"The loan itself","definition":"These are maximum allowable interest rates set by the SBA for variable rate 7(a) loans, protecting borrowers from excessively high rate increases.","url":"https://dealroom.so/glossary/interest-rate-caps","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"slug":"alternative-base-rates","url":"https://dealroom.so/glossary/alternative-base-rates"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"conventional-line-of-credit","term":"Conventional Line of Credit","group":"The loan itself","definition":"This is a flexible loan product from a bank that allows a business to borrow, repay, and re-borrow up to a set limit, typically used for short-term working capital needs.","url":"https://dealroom.so/glossary/conventional-line-of-credit","official_sources":[],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"}]},{"slug":"capital-adequacy","term":"Capital adequacy","group":"Reading the business","definition":"How much capital (cash, assets) a business has relative to its risks and operations. A strong capital position means less risk for you and your lender.","url":"https://dealroom.so/glossary/capital-adequacy","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"sba-lender-status","term":"SBA Lender status","group":"People and paperwork","definition":"Refers to a bank's authorization from the SBA to originate and service SBA-guaranteed loans. Banks can have different levels of approval, affecting how fast they can process your loan.","url":"https://dealroom.so/glossary/sba-lender-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"sba-504-loan","term":"SBA 504 loan","group":"The loan itself","definition":"A different SBA loan program primarily for long-term, fixed-asset financing, like real estate or heavy machinery. It's not typically used for business acquisitions with working capital needs.","url":"https://dealroom.so/glossary/sba-504-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"certified-development-company","url":"https://dealroom.so/glossary/certified-development-company"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"certified-development-company","term":"Certified Development Company","group":"People and paperwork","definition":"A non-profit organization authorized by the SBA to administer the 504 loan program. They work with private lenders to provide financing for fixed assets.","url":"https://dealroom.so/glossary/certified-development-company","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-504-loan","url":"https://dealroom.so/glossary/sba-504-loan"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"sba-lender-status","url":"https://dealroom.so/glossary/sba-lender-status"}]},{"slug":"sba-debenture","term":"SBA debenture","group":"The loan itself","definition":"A type of bond issued by a Certified Development Company (CDC) and guaranteed by the SBA, used to fund the CDC portion of a 504 loan. It's not part of a 7(a) acquisition loan.","url":"https://dealroom.so/glossary/sba-debenture","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-504-loan","url":"https://dealroom.so/glossary/sba-504-loan"},{"slug":"certified-development-company","url":"https://dealroom.so/glossary/certified-development-company"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"}]},{"slug":"lender-match","term":"Lender Match","group":"People and paperwork","definition":"An online referral tool provided by the SBA that connects small businesses with participating SBA lenders. It helps you find banks interested in your loan request.","url":"https://dealroom.so/glossary/lender-match","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"sba-resource-partner","url":"https://dealroom.so/glossary/sba-resource-partner"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"sba-lender-status","url":"https://dealroom.so/glossary/sba-lender-status"}]},{"slug":"sba-resource-partner","term":"SBA resource partner","group":"People and paperwork","definition":"Organizations that partner with the SBA to provide free or low-cost counseling and training to small businesses. Examples include SCORE, Small Business Development Centers (SBDCs), and Women's Business Centers (WBCs).","url":"https://dealroom.so/glossary/sba-resource-partner","official_sources":[{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"lender-match","url":"https://dealroom.so/glossary/lender-match"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"sba-express-loan","term":"SBA Express loan","group":"The loan itself","definition":"A streamlined version of the 7(a) loan program, typically for smaller loan amounts (up to $500,000) with faster processing. Lenders use their own forms and procedures with an SBA guaranty.","url":"https://dealroom.so/glossary/sba-express-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"7-a-small-loan","url":"https://dealroom.so/glossary/7-a-small-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"character-requirement","term":"Character requirement","group":"People and paperwork","definition":"The SBA assesses your personal character, including your credit history and any criminal record, to determine if you are a responsible borrower. Good character is essential for loan eligibility.","url":"https://dealroom.so/glossary/character-requirement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"speculative-investment","term":"Speculative investment","group":"The loan itself","definition":"An ineligible use of SBA loan proceeds where the primary purpose is to profit from short-term market fluctuations or property value increases, rather than operating a business.","url":"https://dealroom.so/glossary/speculative-investment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"gambling-business","url":"https://dealroom.so/glossary/gambling-business"},{"slug":"religious-organization","url":"https://dealroom.so/glossary/religious-organization"}]},{"slug":"gambling-business","term":"Gambling business","group":"The loan itself","definition":"Businesses primarily engaged in gambling activities are ineligible for SBA loans. This includes casinos, racetracks, and businesses deriving more than one-third of their gross annual revenue from gambling.","url":"https://dealroom.so/glossary/gambling-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"speculative-investment","url":"https://dealroom.so/glossary/speculative-investment"},{"slug":"religious-organization","url":"https://dealroom.so/glossary/religious-organization"}]},{"slug":"religious-organization","term":"Religious organization","group":"The loan itself","definition":"Businesses or organizations whose primary purpose is religious teaching, worship, or proselytization are generally ineligible for SBA loans.","url":"https://dealroom.so/glossary/religious-organization","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"gambling-business","url":"https://dealroom.so/glossary/gambling-business"},{"slug":"speculative-investment","url":"https://dealroom.so/glossary/speculative-investment"}]},{"slug":"unencumbered-asset","term":"Unencumbered asset","group":"Reading the business","definition":"An asset that is free and clear of any liens, mortgages, or other legal claims. It can be pledged as collateral for a new loan.","url":"https://dealroom.so/glossary/unencumbered-asset","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"rollover-for-business-startups","term":"Rollover for Business Startups","group":"Your money in the deal","definition":"A strategy that allows you to use funds from your retirement accounts (like a 401k or IRA) to fund your business without incurring taxes or early withdrawal penalties.","url":"https://dealroom.so/glossary/rollover-for-business-startups","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"qualified-robs-provider","term":"Qualified ROBS provider","group":"Your money in the deal","definition":"A Qualified ROBS provider is a third-party administrator that helps you use your retirement funds (401k or IRA) to buy a business without incurring early withdrawal penalties or taxes. This lets you use pre-tax dollars for your equity injection.","url":"https://dealroom.so/glossary/qualified-robs-provider","official_sources":[],"related":[{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"preferred-lender-program","term":"Preferred Lender Program","aka":"PLP","group":"People and paperwork","definition":"The Preferred Lender Program allows certain banks to underwrite and approve SBA loans without prior SBA review, speeding up the process. Working with a PLP lender means a faster closing for your acquisition.","url":"https://dealroom.so/glossary/preferred-lender-program","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"construction-loan","term":"Construction loan","group":"The loan itself","definition":"A construction loan funds new construction or significant renovations, typically disbursed in stages as work progresses. While an SBA 7(a) can fund real estate, it's not a true construction loan product in the conventional sense.","url":"https://dealroom.so/glossary/construction-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"business-real-estate","url":"https://dealroom.so/glossary/business-real-estate"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"condition-precedent-to-funding","term":"Condition precedent to funding","group":"Doing the deal","definition":"A condition precedent is a requirement that must be met before your loan funds can be released. Failing to satisfy these conditions can delay or even kill your deal.","url":"https://dealroom.so/glossary/condition-precedent-to-funding","official_sources":[],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"disbursement-schedule","term":"Disbursement schedule","group":"Doing the deal","definition":"A disbursement schedule details when and how loan funds will be released to various parties (seller, landlord, vendors). It dictates the flow of cash at closing and post-closing.","url":"https://dealroom.so/glossary/disbursement-schedule","official_sources":[],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"sba-loan-guarantee","term":"SBA loan guarantee","aka":"SBA guaranty","group":"The loan itself","definition":"The SBA loan guarantee is the portion of your loan that the Small Business Administration promises to reimburse the lender if you default. This guarantee reduces the lender's risk, making them more willing to lend.","url":"https://dealroom.so/glossary/sba-loan-guarantee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"guarantee-repair","term":"Guarantee repair","group":"The loan itself","definition":"Guarantee repair refers to actions the SBA takes to reduce its financial obligation on a defaulted loan, often due to lender errors. This can happen if the lender didn't follow SBA rules.","url":"https://dealroom.so/glossary/guarantee-repair","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"guarantee-denial","term":"Guarantee denial","group":"The loan itself","definition":"A guarantee denial means the SBA refuses to honor its promise to reimburse the lender on a defaulted loan, usually due to severe lender non-compliance. This is the ultimate consequence for a lender.","url":"https://dealroom.so/glossary/guarantee-denial","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"guarantee-repair","url":"https://dealroom.so/glossary/guarantee-repair"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"business-real-estate","term":"Business real estate","aka":"Owner-occupied commercial real estate","group":"Reading the business","definition":"Business real estate refers to the physical property where a business operates, such as an office building, warehouse, or retail space. Acquiring this alongside the business can offer stability and control.","url":"https://dealroom.so/glossary/business-real-estate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"tangible-business-property","url":"https://dealroom.so/glossary/tangible-business-property"}]},{"slug":"tangible-business-property","term":"Tangible business property","group":"Reading the business","definition":"Tangible business property refers to physical assets like equipment, vehicles, inventory, and furniture that have a measurable value. These are assets you can touch and see, distinct from intangible assets.","url":"https://dealroom.so/glossary/tangible-business-property","official_sources":[],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"outstanding-loan-balance","term":"Outstanding loan balance","group":"The loan itself","definition":"The outstanding loan balance is the remaining principal amount you owe on a loan at any given time, not including accrued interest. This is the core amount you are working to pay down.","url":"https://dealroom.so/glossary/outstanding-loan-balance","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"}]},{"slug":"guarantee-payment","term":"Guarantee payment","group":"The loan itself","definition":"A guarantee payment is the reimbursement the SBA makes to a lender when an SBA-guaranteed loan defaults and the lender suffers a loss. This is what the guarantee actually does.","url":"https://dealroom.so/glossary/guarantee-payment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"sba-loan-guarantee","url":"https://dealroom.so/glossary/sba-loan-guarantee"}]},{"slug":"collection-effort","term":"Collection effort","group":"Doing the deal","definition":"A collection effort refers to the actions a lender takes to recover money owed on a defaulted loan, including contacting the borrower, pursuing collateral, and enforcing personal guarantees.","url":"https://dealroom.so/glossary/collection-effort","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"personal-obligation","term":"Personal obligation","group":"People and paperwork","definition":"A personal obligation is a debt or responsibility for which you are individually liable, typically through a personal guarantee. This means your personal assets are at risk if the business defaults.","url":"https://dealroom.so/glossary/personal-obligation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"claim","term":"Claim","group":"The loan itself","definition":"When a borrower defaults on an SBA loan, the lender can \"claim\" a portion of the loss from the SBA. This is the SBA fulfilling its guaranty to the lender.","url":"https://dealroom.so/glossary/claim","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"disqualification","term":"Disqualification","group":"Doing the deal","definition":"This refers to reasons why you or the business might be ineligible for an SBA loan, or why a lender might reject your application. Common reasons include prior loan defaults or certain types of businesses.","url":"https://dealroom.so/glossary/disqualification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"passive-real-estate-activity","url":"https://dealroom.so/glossary/passive-real-estate-activity"}]},{"slug":"business-debt","term":"Business debt","group":"Reading the business","definition":"This is any money the target business owes to lenders, vendors, or others. When acquiring a business, you need to understand what debt you'll inherit or what needs to be paid off at closing.","url":"https://dealroom.so/glossary/business-debt","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"tangible-benefit","term":"Tangible benefit","group":"The loan itself","definition":"For an SBA loan to refinance existing debt, the new loan must provide a \"tangible benefit\" to the borrower. This usually means a lower interest rate, longer term, or reduced monthly payments.","url":"https://dealroom.so/glossary/tangible-benefit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"refinancing","url":"https://dealroom.so/glossary/refinancing"},{"slug":"loan-structure","url":"https://dealroom.so/glossary/loan-structure"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"sba-cap","term":"SBA cap","group":"The loan itself","definition":"This refers to the maximum loan amount the SBA will guarantee, which is $5 million for most 7(a) loans. It sets a ceiling on how much you can borrow through the program.","url":"https://dealroom.so/glossary/sba-cap","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"loan-structure","url":"https://dealroom.so/glossary/loan-structure"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"remittance","term":"Remittance","group":"Doing the deal","definition":"This is the act of sending money, often related to loan payments or fees. For SBA loans, it refers to how lenders send the upfront guaranty fee and ongoing servicing fees to the SBA.","url":"https://dealroom.so/glossary/remittance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"qualified-plan","term":"Qualified plan","group":"Your money in the deal","definition":"This term refers to tax-advantaged retirement plans like 401(k)s or IRAs, governed by ERISA. Funds from these plans can sometimes be used for a business acquisition without immediate tax penalties through a ROBS structure.","url":"https://dealroom.so/glossary/qualified-plan","official_sources":[],"related":[{"slug":"rollovers-for-business-start-ups","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"rollovers-for-business-start-ups","term":"Rollovers for Business Start-ups","aka":"ROBS","group":"Your money in the deal","definition":"A ROBS plan allows you to use your retirement funds (like a 401(k) or IRA) to fund your business acquisition without incurring early withdrawal penalties or taxes. It involves setting up a new C-corporation and a 401(k) plan within it.","url":"https://dealroom.so/glossary/rollovers-for-business-start-ups","official_sources":[],"related":[{"slug":"qualified-plan","url":"https://dealroom.so/glossary/qualified-plan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"tiered-fee-structure","term":"Tiered fee structure","group":"Doing the deal","definition":"This describes a fee arrangement where the percentage charged changes based on the size or value of the transaction. For example, a business broker might charge a higher percentage on the first portion of the sale price and a lower percentage on amounts above that.","url":"https://dealroom.so/glossary/tiered-fee-structure","official_sources":[],"related":[{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"}]},{"slug":"passive-real-estate-activity","term":"Passive real estate activity","group":"Reading the business","definition":"This refers to businesses primarily involved in owning and renting real estate, rather than actively operating a business. Such activities are generally ineligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/passive-real-estate-activity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"sba-compliance","url":"https://dealroom.so/glossary/sba-compliance"}]},{"slug":"loan-structure","term":"Loan structure","group":"The loan itself","definition":"This refers to the specific terms and conditions of your loan, including interest rate, repayment schedule, collateral requirements, and any covenants. It's the blueprint of your financing.","url":"https://dealroom.so/glossary/loan-structure","official_sources":[],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"sba-compliance","term":"SBA compliance","group":"People and paperwork","definition":"This means adhering to all the rules, regulations, and procedures set by the Small Business Administration for its loan programs. Lenders and borrowers must follow these to ensure the loan is guaranteed.","url":"https://dealroom.so/glossary/sba-compliance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"universal-life-insurance-policy","term":"Universal life insurance policy","group":"Your money in the deal","definition":"This is a type of permanent life insurance with a cash value component that grows over time. Its flexibility allows policyholders to adjust premiums and death benefits.","url":"https://dealroom.so/glossary/universal-life-insurance-policy","official_sources":[],"related":[{"slug":"cash-value","url":"https://dealroom.so/glossary/cash-value"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"cash-value","term":"Cash value","group":"Your money in the deal","definition":"This is the savings component of certain permanent life insurance policies, like whole life or universal life. It grows tax-deferred and can be accessed by the policyholder during their lifetime.","url":"https://dealroom.so/glossary/cash-value","official_sources":[],"related":[{"slug":"universal-life-insurance-policy","url":"https://dealroom.so/glossary/universal-life-insurance-policy"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"cash-surrender-value","term":"Cash surrender value","group":"Your money in the deal","definition":"The amount of money you get back if you cancel a permanent life insurance policy before it matures. For a buyer, this can be a source of funds for your equity injection.","url":"https://dealroom.so/glossary/cash-surrender-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"death-benefit","term":"Death benefit","group":"Your money in the deal","definition":"The payout from a life insurance policy to your beneficiaries upon your death. For a buyer getting an SBA loan, this isn't directly relevant to funding, but the policy itself might be collateral.","url":"https://dealroom.so/glossary/death-benefit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"premium-payment","term":"Premium payment","group":"Your money in the deal","definition":"The regular payment you make to keep an insurance policy active. As a buyer, your ability to make these payments will be part of your personal financial picture.","url":"https://dealroom.so/glossary/premium-payment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"unsecured-debt","term":"Unsecured debt","group":"Reading the business","definition":"Debt not backed by specific collateral, like credit card debt or personal loans. For a buyer, this increases the business's or your personal liabilities without offering assets to cover it if things go wrong.","url":"https://dealroom.so/glossary/unsecured-debt","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"debt-to-income-ratio","url":"https://dealroom.so/glossary/debt-to-income-ratio"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"delinquent-loan","term":"Delinquent loan","group":"The loan itself","definition":"A loan where payments are past due, but not yet in default. A history of delinquent loans on your credit report will severely impact your ability to get an SBA loan.","url":"https://dealroom.so/glossary/delinquent-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"default-notice","url":"https://dealroom.so/glossary/default-notice"}]},{"slug":"default-notice","term":"Default notice","group":"The loan itself","definition":"A formal letter from a lender stating that a borrower has failed to meet the loan terms, typically by missing payments, and is now in default. This is a serious legal step.","url":"https://dealroom.so/glossary/default-notice","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"delinquent-loan","url":"https://dealroom.so/glossary/delinquent-loan"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"workout","term":"Workout","group":"Doing the deal","definition":"An agreement between a borrower and lender to restructure loan terms to avoid default or foreclosure when the borrower is struggling. This often involves new payment schedules.","url":"https://dealroom.so/glossary/workout","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"asset-disposition","term":"Asset disposition","group":"Doing the deal","definition":"The sale or disposal of business assets. In a business acquisition, this refers to how specific assets are handled, especially if they are not part of the core purchase.","url":"https://dealroom.so/glossary/asset-disposition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"guaranty-obligation","term":"Guaranty obligation","group":"The loan itself","definition":"The personal responsibility you take on to repay an SBA loan if the business cannot. This is a core requirement for all owners with 20% or more equity.","url":"https://dealroom.so/glossary/guaranty-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"appeal","term":"Appeal","group":"Doing the deal","definition":"The formal process of requesting a review of an unfavorable decision, such as an SBA loan denial. This is your chance to present new information or argue a mistake.","url":"https://dealroom.so/glossary/appeal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"interim-financial-statement","term":"Interim financial statement","group":"Reading the business","definition":"Financial reports for a period shorter than a full fiscal year, like quarterly or monthly statements. Buyers use these to see recent performance beyond annual tax returns.","url":"https://dealroom.so/glossary/interim-financial-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"credit-file","term":"Credit file","group":"People and paperwork","definition":"A collection of information about your past borrowing and repayment behavior, maintained by credit bureaus. Lenders use this to assess your creditworthiness.","url":"https://dealroom.so/glossary/credit-file","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"third-party-appraisal","term":"Third-party appraisal","group":"Reading the business","definition":"An independent valuation of assets or the entire business performed by an unbiased expert. Lenders often require this to verify the fair market value of collateral or the business itself.","url":"https://dealroom.so/glossary/third-party-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"overvaluation","term":"Overvaluation","group":"Reading the business","definition":"When an asset or business is priced higher than its true fair market value. This is a major risk for a buyer and a red flag for lenders.","url":"https://dealroom.so/glossary/overvaluation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"third-party-appraisal","url":"https://dealroom.so/glossary/third-party-appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"federal-debarment","term":"Federal debarment","aka":"Debarred from federal programs","group":"People and paperwork","definition":"Federal debarment means you're banned from doing business with the government. If the seller or business is debarred, your SBA loan won't close, as it's a federal program.","url":"https://dealroom.so/glossary/federal-debarment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"suspension","url":"https://dealroom.so/glossary/suspension"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"suspension","term":"Suspension","group":"People and paperwork","definition":"Suspension means you're temporarily ineligible for federal programs, including SBA loans. It's a serious red flag that can halt your deal.","url":"https://dealroom.so/glossary/suspension","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"federal-debarment","url":"https://dealroom.so/glossary/federal-debarment"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"cash-injection","term":"Cash injection","group":"Your money in the deal","definition":"This is the money you put into the deal, typically as your down payment and working capital. The SBA has specific rules on how much and where it comes from.","url":"https://dealroom.so/glossary/cash-injection","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"sba-subordination-requirement","term":"SBA subordination requirement","group":"The loan itself","definition":"This means any seller financing or other debt in your deal must take a backseat to the SBA loan. The SBA must be paid first if the business fails.","url":"https://dealroom.so/glossary/sba-subordination-requirement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"}]},{"slug":"affiliated-businesses","term":"Affiliated businesses","group":"Reading the business","definition":"These are businesses related by ownership or control. The SBA combines their financials and employee counts to determine if you meet size standards and other eligibility criteria.","url":"https://dealroom.so/glossary/affiliated-businesses","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"special-voting-rights","term":"Special voting rights","group":"People and paperwork","definition":"These are extra powers given to certain shareholders, letting them control decisions disproportionately. You need to understand who holds them, as they can impact your control post-acquisition.","url":"https://dealroom.so/glossary/special-voting-rights","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"legal-structure","url":"https://dealroom.so/glossary/legal-structure"},{"slug":"conversion-rights","url":"https://dealroom.so/glossary/conversion-rights"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"options","term":"Options","group":"Reading the business","definition":"Options give someone the right to buy shares at a set price. They represent potential dilution or future ownership claims you need to account for in your valuation.","url":"https://dealroom.so/glossary/options","official_sources":[],"related":[{"slug":"conversion-rights","url":"https://dealroom.so/glossary/conversion-rights"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"conversion-rights","term":"Conversion rights","group":"Reading the business","definition":"These allow holders of certain securities, like preferred stock or debt, to convert them into common stock. They can impact your ownership and the capital structure post-acquisition.","url":"https://dealroom.so/glossary/conversion-rights","official_sources":[],"related":[{"slug":"options","url":"https://dealroom.so/glossary/options"},{"slug":"special-voting-rights","url":"https://dealroom.so/glossary/special-voting-rights"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"legal-structure","url":"https://dealroom.so/glossary/legal-structure"}]},{"slug":"interlocking-directorates","term":"Interlocking directorates","group":"People and paperwork","definition":"This occurs when the same people sit on the boards of directors for multiple companies. It's a red flag for potential conflicts of interest or affiliation issues that the SBA cares about.","url":"https://dealroom.so/glossary/interlocking-directorates","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliated-businesses","url":"https://dealroom.so/glossary/affiliated-businesses"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"doing-business-as-name","term":"Doing business as name","aka":"DBA name","group":"People and paperwork","definition":"This is a trade name used by a business that isn't its official legal entity name. You need to ensure all assets and liabilities associated with the DBA are correctly transferred in the sale.","url":"https://dealroom.so/glossary/doing-business-as-name","official_sources":[],"related":[{"slug":"legal-structure","url":"https://dealroom.so/glossary/legal-structure"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"ucc-filings","url":"https://dealroom.so/glossary/ucc-filings"}]},{"slug":"legal-structure","term":"Legal structure","group":"People and paperwork","definition":"This is how a business is legally organized (e.g., LLC, Corporation, Sole Proprietor). It affects liability, taxes, and how you structure the acquisition.","url":"https://dealroom.so/glossary/legal-structure","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"}]},{"slug":"ucc-filings","term":"UCC filings","aka":"Uniform Commercial Code filings","group":"People and paperwork","definition":"These are public notices showing who has a lien on a business's assets. You must check them to ensure you're buying assets free and clear of the seller's debts.","url":"https://dealroom.so/glossary/ucc-filings","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"}]},{"slug":"statutory-authority","term":"Statutory authority","group":"People and paperwork","definition":"This refers to the power granted by law to a government agency, like the SBA, to create and enforce rules. It's why their regulations apply to your loan.","url":"https://dealroom.so/glossary/statutory-authority","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"patents","term":"Patents","group":"Reading the business","definition":"Patents protect inventions, giving the owner exclusive rights. If the business relies on patented technology, you need to verify ownership and transferability during due diligence.","url":"https://dealroom.so/glossary/patents","official_sources":[],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"legal-structure","url":"https://dealroom.so/glossary/legal-structure"}]},{"slug":"trademarks","term":"Trademarks","group":"Reading the business","definition":"A trademark protects brand names, logos, and slogans. For a buyer, these are critical assets that define a business's identity and market recognition, impacting its value and competitive edge.","url":"https://dealroom.so/glossary/trademarks","official_sources":[],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"speculative-venture","term":"Speculative venture","group":"The loan itself","definition":"This is a business without a proven track record or a solid plan to generate revenue, like a startup based solely on future projections. SBA loans generally do not fund speculative ventures, as they carry high risk.","url":"https://dealroom.so/glossary/speculative-venture","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"startup-loan","url":"https://dealroom.so/glossary/startup-loan"},{"slug":"eligible-industry","url":"https://dealroom.so/glossary/eligible-industry"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"commercial-mortgage","term":"Commercial mortgage","group":"The loan itself","definition":"A loan secured by commercial real estate, used to purchase or refinance properties like offices or warehouses. When buying a business that owns its real estate, this loan component is key to financing the property.","url":"https://dealroom.so/glossary/commercial-mortgage","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"substantial-benefit","term":"Substantial benefit","group":"The loan itself","definition":"This SBA requirement ensures that a 7(a) loan for debt refinancing or a change of ownership genuinely helps the small business. It means the loan must provide a clear, measurable positive impact, not just a minor adjustment.","url":"https://dealroom.so/glossary/substantial-benefit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"debt-refinancing","url":"https://dealroom.so/glossary/debt-refinancing"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"debt-refinancing","term":"Debt refinancing","group":"The loan itself","definition":"This involves taking out a new loan to pay off existing business debt, usually to get better terms, lower interest rates, or consolidate multiple debts. An SBA 7(a) loan can be used for this if it provides a substantial benefit.","url":"https://dealroom.so/glossary/debt-refinancing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"substantial-benefit","url":"https://dealroom.so/glossary/substantial-benefit"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-cost","url":"https://dealroom.so/glossary/total-project-cost"}]},{"slug":"annual-revenue","term":"Annual revenue","group":"Reading the business","definition":"The total income a business generates from its primary operations over a 12-month period, before any expenses are deducted. This is a key indicator of a business's size and ability to generate sales.","url":"https://dealroom.so/glossary/annual-revenue","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"receipts","url":"https://dealroom.so/glossary/receipts"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"receipts","term":"Receipts","group":"Reading the business","definition":"For SBA purposes, \"receipts\" refers to the gross income (sales plus other income) of a business over a fiscal year. This figure is used to determine if a business meets the SBA's size standards for eligibility.","url":"https://dealroom.so/glossary/receipts","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"annual-revenue","url":"https://dealroom.so/glossary/annual-revenue"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"eligible-industry","url":"https://dealroom.so/glossary/eligible-industry"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"eligible-industry","term":"Eligible industry","group":"The loan itself","definition":"The SBA restricts 7(a) loans to businesses operating in specific industries and prohibits funding for certain types of ventures. This determines if the business you want to buy can even qualify for an SBA loan.","url":"https://dealroom.so/glossary/eligible-industry","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"speculative-venture","url":"https://dealroom.so/glossary/speculative-venture"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"}]},{"slug":"startup-loan","term":"Startup loan","group":"The loan itself","definition":"A loan specifically for new businesses with no operating history or established revenue. SBA 7(a) loans are generally not designed for true startups, preferring businesses with proven cash flow.","url":"https://dealroom.so/glossary/startup-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"speculative-venture","url":"https://dealroom.so/glossary/speculative-venture"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"statutory-maximum","term":"Statutory maximum","group":"The loan itself","definition":"This refers to the highest loan amount the SBA can guarantee for a single borrower under the 7(a) program. It's a hard cap on the total funds you can get.","url":"https://dealroom.so/glossary/statutory-maximum","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-cost","url":"https://dealroom.so/glossary/total-project-cost"},{"slug":"loan-exposure","url":"https://dealroom.so/glossary/loan-exposure"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"total-project-cost","term":"Total project cost","group":"Reading the business","definition":"The complete sum of all funds needed to acquire a business, including the purchase price, working capital, closing costs, and any required renovations or fees. This is the full financing picture.","url":"https://dealroom.so/glossary/total-project-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"loan-exposure","term":"Loan exposure","group":"The loan itself","definition":"This is the total amount of money a lender or the SBA has at risk on a particular loan. It represents the maximum potential loss if the borrower defaults.","url":"https://dealroom.so/glossary/loan-exposure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"sba-express-program","term":"SBA Express program","group":"The loan itself","definition":"A streamlined version of the 7(a) loan program, offering faster processing times and lower loan amounts (up to $500,000). It's designed for smaller, less complex financing needs.","url":"https://dealroom.so/glossary/sba-express-program","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"7-a-small-loan","url":"https://dealroom.so/glossary/7-a-small-loan"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"alternative-financing","term":"Alternative financing","group":"The loan itself","definition":"Any method of funding a business that isn't a traditional bank loan, such as crowdfunding, venture capital, or private debt. Buyers should consider these if conventional loans aren't an option.","url":"https://dealroom.so/glossary/alternative-financing","official_sources":[],"related":[{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"personal-loan","term":"Personal loan","group":"The loan itself","definition":"A personal loan is debt taken out by an individual, not a business. For a business acquisition, your personal loan funds can be part of your equity injection, but must be fully unsecured and not funded by the business itself.","url":"https://dealroom.so/glossary/personal-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"benchmark-rate","term":"Benchmark Rate","group":"The loan itself","definition":"This is the underlying interest rate index, like WSJ Prime or Term SOFR, that your SBA loan's variable interest rate is based on. Your loan rate will be this benchmark plus a spread.","url":"https://dealroom.so/glossary/benchmark-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"upfront-fee","term":"Upfront Fee","aka":"Lender closing costs","group":"Doing the deal","definition":"These are various charges you pay at the start of the loan, often rolled into your total project costs. They include lender fees, packaging fees, and the SBA's upfront guaranty fee.","url":"https://dealroom.so/glossary/upfront-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"sba-approval","term":"SBA Approval","aka":"Loan Authorization","group":"Doing the deal","definition":"This is the official green light from the Small Business Administration that your loan application meets their criteria and they will guarantee a portion of it. It's a key milestone in the closing process.","url":"https://dealroom.so/glossary/sba-approval","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"environmental-assessments","term":"Environmental Assessments","group":"Reading the business","definition":"These are professional evaluations of a property to identify potential environmental contamination risks. They're crucial for understanding liabilities, especially if real estate is part of the acquisition.","url":"https://dealroom.so/glossary/environmental-assessments","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"full-collateralization","term":"Full Collateralization","group":"The loan itself","definition":"This means the lender has enough security interests in your business and personal assets to cover the full loan amount in case of default. It protects the lender and the SBA.","url":"https://dealroom.so/glossary/full-collateralization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"assignment","term":"Assignment","group":"Doing the deal","definition":"This is a legal transfer of rights or property from one party to another. In an SBA deal, you might assign rights to an insurance policy or a contract to the lender.","url":"https://dealroom.so/glossary/assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"}]},{"slug":"pledge","term":"Pledge","group":"Doing the deal","definition":"A pledge is a formal commitment to offer assets as security for a loan. It grants the lender a security interest in specific property until the debt is repaid.","url":"https://dealroom.so/glossary/pledge","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"pledge-agreement","url":"https://dealroom.so/glossary/pledge-agreement"}]},{"slug":"pledge-agreement","term":"Pledge Agreement","group":"Doing the deal","definition":"This is the legal document that formalizes the pledging of assets as collateral for a loan. It details the specific property being offered as security.","url":"https://dealroom.so/glossary/pledge-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"pledge","url":"https://dealroom.so/glossary/pledge"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"}]},{"slug":"deficiency","term":"Deficiency","group":"The loan itself","definition":"A deficiency occurs when the proceeds from liquidating collateral after a loan default are less than the outstanding loan balance. The borrower is still liable for this remaining amount.","url":"https://dealroom.so/glossary/deficiency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"loan-covenants","term":"Loan Covenants","group":"The loan itself","definition":"These are conditions in your loan agreement that you must continue to meet throughout the loan's term. They protect the lender by ensuring the business remains financially sound.","url":"https://dealroom.so/glossary/loan-covenants","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"financial-statements","url":"https://dealroom.so/glossary/financial-statements"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"real-estate-acquisition","term":"Real Estate Acquisition","group":"Doing the deal","definition":"This refers to buying the physical land and buildings where the business operates. An SBA 7(a) loan can finance this alongside the business purchase, provided you occupy at least 51% of the space.","url":"https://dealroom.so/glossary/real-estate-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"environmental-assessments","url":"https://dealroom.so/glossary/environmental-assessments"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"financial-strength","term":"Financial Strength","group":"Reading the business","definition":"This refers to the overall health and stability of the business's finances, including its ability to generate profits, manage debt, and maintain sufficient cash flow.","url":"https://dealroom.so/glossary/financial-strength","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"commercial-line-of-credit","term":"Commercial Line of Credit","group":"The loan itself","definition":"This is a flexible loan facility for businesses, allowing them to draw funds as needed up to a certain limit and repay them. It's used for working capital or short-term operational needs.","url":"https://dealroom.so/glossary/commercial-line-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"seasonal-business","url":"https://dealroom.so/glossary/seasonal-business"}]},{"slug":"construction-costs","term":"Construction costs","group":"Reading the business","definition":"These are expenses for building new structures. For a buyer, knowing these costs helps assess if a business's expansion plans are feasible and if the property value reflects potential future outlays.","url":"https://dealroom.so/glossary/construction-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"renovation-expenses","url":"https://dealroom.so/glossary/renovation-expenses"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"renovation-expenses","term":"Renovation expenses","group":"Reading the business","definition":"These are costs to improve or update existing property. Buyers need to understand these expenses to budget for necessary upgrades or if the seller has deferred maintenance, impacting future cash flow.","url":"https://dealroom.so/glossary/renovation-expenses","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"construction-costs","url":"https://dealroom.so/glossary/construction-costs"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"real-estate-secured-loans","term":"Real estate secured loans","group":"The loan itself","definition":"These are loans where real estate serves as collateral. As a buyer, you'll see these if the business owns its property, and the SBA 7(a) loan will likely be secured by that real estate.","url":"https://dealroom.so/glossary/real-estate-secured-loans","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"sba-size-standard","term":"SBA size standard","group":"The loan itself","definition":"This is the maximum size a business can be (based on revenue or employees) to qualify for SBA programs. Your target business must meet this standard for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/sba-size-standard","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"acceleration","term":"Acceleration","group":"The loan itself","definition":"This is a loan clause allowing the lender to demand immediate repayment of the entire outstanding balance if certain conditions (like default) are met. It means your loan could become due suddenly.","url":"https://dealroom.so/glossary/acceleration","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"bankruptcy-filing","url":"https://dealroom.so/glossary/bankruptcy-filing"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"prudent-servicing","term":"Prudent servicing","group":"Doing the deal","definition":"This refers to the lender's responsibility to manage and collect on a loan in a commercially reasonable manner. The SBA requires lenders to follow these standards to ensure the loan is handled properly.","url":"https://dealroom.so/glossary/prudent-servicing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"fully-amortizing-term","term":"Fully amortizing term","group":"The loan itself","definition":"A loan with a fully amortizing term means your regular payments of principal and interest will pay off the entire loan balance by the end of the term. There's no large \"balloon payment\" at the end.","url":"https://dealroom.so/glossary/fully-amortizing-term","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"balloon-payment","url":"https://dealroom.so/glossary/balloon-payment"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"sba-7-a-loan-guaranty","term":"SBA 7(a) loan guaranty","group":"The loan itself","definition":"This is the portion of your loan that the SBA promises to repay your lender if you default. It reduces the lender's risk, making it easier for small businesses to get loans.","url":"https://dealroom.so/glossary/sba-7-a-loan-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"bankruptcy-filing","term":"Bankruptcy filing","group":"People and paperwork","definition":"This is the formal legal process where an individual or business declares inability to repay debts. For a buyer, a past bankruptcy can affect your creditworthiness and SBA loan eligibility.","url":"https://dealroom.so/glossary/bankruptcy-filing","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"discharged","term":"Discharged","group":"Doing the deal","definition":"In bankruptcy, \"discharged\" means a court has legally released you from most debts. It's important for buyers because a discharged bankruptcy shows you've completed the process, which is better than an ongoing one.","url":"https://dealroom.so/glossary/discharged","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"bankruptcy-filing","url":"https://dealroom.so/glossary/bankruptcy-filing"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"prepayment","term":"Prepayment","group":"The loan itself","definition":"Prepayment means paying off your loan earlier than scheduled. While it sounds good, SBA 7(a) loans often have a prepayment penalty for early repayment in the first few years.","url":"https://dealroom.so/glossary/prepayment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"prepayment-penalty","url":"https://dealroom.so/glossary/prepayment-penalty"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"anti-money-laundering-check","term":"Anti-money laundering check","aka":"AML check","group":"People and paperwork","definition":"An AML check is a mandatory verification process banks conduct to ensure funds aren't from illegal activities. As a buyer, you'll undergo this check to confirm the legitimacy of your equity injection.","url":"https://dealroom.so/glossary/anti-money-laundering-check","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"arbitrage","term":"Arbitrage","group":"Reading the business","definition":"Arbitrage is profiting from price differences of the same asset in different markets. While less common in small business M&A, understanding market inefficiencies can reveal opportunities.","url":"https://dealroom.so/glossary/arbitrage","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"}]},{"slug":"capital-gain","term":"Capital gain","group":"Reading the business","definition":"A capital gain is the profit you make from selling an asset (like a business) for more than you paid for it. This is a primary driver for sellers and a potential future benefit for you as a buyer.","url":"https://dealroom.so/glossary/capital-gain","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"assignment-of-policy","term":"Assignment of policy","group":"Doing the deal","definition":"This is when you formally transfer ownership of a life insurance policy to the lender as collateral for your SBA loan. It ensures the lender gets paid if something happens to you, the key person.","url":"https://dealroom.so/glossary/assignment-of-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"prior-sba-approval","term":"Prior SBA approval","group":"Doing the deal","definition":"This means the SBA must review and approve certain aspects of your loan or business structure before the lender can proceed. It's a key step for unusual situations or specific changes.","url":"https://dealroom.so/glossary/prior-sba-approval","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"change-of-control","term":"Change of control","group":"Doing the deal","definition":"This refers to when ownership of a business shifts, like when you buy a company. For an SBA loan, it's the core event that triggers the need for new financing and eligibility review.","url":"https://dealroom.so/glossary/change-of-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"uniform-standards-of-professional-appraisal-practice","term":"Uniform Standards of Professional Appraisal Practice","group":"Reading the business","definition":"These are the ethical and performance standards for appraisals, ensuring they are credible and unbiased. Your business valuation or real estate appraisal will adhere to these rules.","url":"https://dealroom.so/glossary/uniform-standards-of-professional-appraisal-practice","official_sources":[],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraiser","url":"https://dealroom.so/glossary/appraiser"}]},{"slug":"underwriting-risk","term":"Underwriting risk","group":"The loan itself","definition":"This is the risk a lender takes that you won't repay your loan as agreed. Lenders assess this by scrutinizing your business, personal finances, and the deal's structure.","url":"https://dealroom.so/glossary/underwriting-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"automated-clearing-house-debit","term":"Automated Clearing House debit","group":"Doing the deal","definition":"This is an electronic transfer that automatically pulls your loan payments directly from your bank account. It's how most SBA loan payments are collected.","url":"https://dealroom.so/glossary/automated-clearing-house-debit","official_sources":[],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"family-member-transaction","term":"Family member transaction","group":"Doing the deal","definition":"This is when you buy a business from a close family member. The SBA has specific rules to ensure these deals are legitimate and not just a way to get cheap financing.","url":"https://dealroom.so/glossary/family-member-transaction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arms-length","url":"https://dealroom.so/glossary/arms-length"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"change-of-control","url":"https://dealroom.so/glossary/change-of-control"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"arms-length","term":"Arms-length","group":"Doing the deal","definition":"This describes a transaction where both buyer and seller are independent, acting in their own self-interest, and have no pre-existing relationship that could influence the deal terms.","url":"https://dealroom.so/glossary/arms-length","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"family-member-transaction","url":"https://dealroom.so/glossary/family-member-transaction"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"heightened-due-diligence","term":"Heightened due diligence","group":"Reading the business","definition":"This means performing an extra deep dive into specific areas of the business because of identified red flags or unusual risks. It goes beyond standard checks to uncover hidden issues.","url":"https://dealroom.so/glossary/heightened-due-diligence","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"trade-secret","term":"Trade secret","group":"Reading the business","definition":"This is confidential business information that gives a company a competitive edge, like a special recipe or proprietary process. It's a valuable intangible asset.","url":"https://dealroom.so/glossary/trade-secret","official_sources":[],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"trade-name","term":"Trade name","group":"Reading the business","definition":"This is the name a business operates under, distinct from its legal entity name. It's what customers recognize and associate with the brand.","url":"https://dealroom.so/glossary/trade-name","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"trade-secret","url":"https://dealroom.so/glossary/trade-secret"}]},{"slug":"going-concern-value","term":"Going concern value","group":"Reading the business","definition":"This is the value of a business as an operating entity, including its future earning potential, rather than just the sum of its individual assets if liquidated.","url":"https://dealroom.so/glossary/going-concern-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"non-real-estate-collateral","term":"Non-real estate collateral","group":"The loan itself","definition":"This refers to any asset other than land or buildings that secures your SBA loan, such as equipment, inventory, or accounts receivable.","url":"https://dealroom.so/glossary/non-real-estate-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"general-intangible","url":"https://dealroom.so/glossary/general-intangible"}]},{"slug":"cash-flow-coverage","term":"Cash flow coverage","group":"Reading the business","definition":"This measures a business's ability to generate enough cash to cover its debt payments and other obligations. It's a critical indicator of financial health for lenders.","url":"https://dealroom.so/glossary/cash-flow-coverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"seller-s-equity","term":"Seller's equity","group":"Your money in the deal","definition":"The portion of the purchase price the seller leaves in the business as a loan to the buyer. It reduces your cash injection and shows the seller's confidence.","url":"https://dealroom.so/glossary/seller-s-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"electronic-loan-system","term":"Electronic Loan System","aka":"ELS","group":"People and paperwork","definition":"The SBA's digital platform lenders use to submit loan applications, get approvals, and manage servicing actions. It's the central hub for your 7(a) loan.","url":"https://dealroom.so/glossary/electronic-loan-system","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"cusip-number","term":"CUSIP number","group":"Reading the business","definition":"A unique alphanumeric code identifying U.S. and Canadian securities. It's like a serial number for publicly traded stocks and bonds.","url":"https://dealroom.so/glossary/cusip-number","official_sources":[],"related":[{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"interest-accrual","term":"Interest accrual","group":"The loan itself","definition":"The process of interest building up on your loan balance over time, even before payments start. It determines the total interest owed on your debt.","url":"https://dealroom.so/glossary/interest-accrual","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"management-company","term":"Management company","group":"People and paperwork","definition":"A separate entity providing management services to a business, common in franchises or for absentee owners. Understand its impact on the business.","url":"https://dealroom.so/glossary/management-company","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"ineligible-loan","term":"Ineligible loan","group":"The loan itself","definition":"An SBA loan that fails to meet specific SBA eligibility requirements. If deemed ineligible, the SBA can deny its guaranty, jeopardizing your deal.","url":"https://dealroom.so/glossary/ineligible-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"7-a-working-capital-pilot-program","term":"7(a) Working Capital Pilot Program","aka":"WCP","group":"The loan itself","definition":"An SBA pilot program providing working capital with streamlined processes, often for inventory or accounts receivable. It supports operational needs post-acquisition.","url":"https://dealroom.so/glossary/7-a-working-capital-pilot-program","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"borrowing-base","term":"Borrowing base","group":"The loan itself","definition":"The maximum amount a lender allows you to draw from a line of credit, based on eligible collateral like accounts receivable and inventory.","url":"https://dealroom.so/glossary/borrowing-base","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"orderly-liquidation","term":"Orderly liquidation","group":"Doing the deal","definition":"Selling a business's assets in a controlled, non-distressed way to maximize recovery value, typically upon default. This is the lender's goal if things go south.","url":"https://dealroom.so/glossary/orderly-liquidation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-disposition","url":"https://dealroom.so/glossary/collateral-disposition"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"}]},{"slug":"disallowed-expense","term":"Disallowed expense","group":"Reading the business","definition":"An expense not allowed for tax deduction or, in valuation, one a buyer wouldn't incur. It's an \"add-back\" to show true profitability.","url":"https://dealroom.so/glossary/disallowed-expense","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"formal-appraisal","term":"Formal appraisal","group":"Reading the business","definition":"An independent, professional valuation of assets or the business itself by a qualified appraiser. It determines fair market value for financing.","url":"https://dealroom.so/glossary/formal-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"collateral-disposition","term":"Collateral disposition","group":"Doing the deal","definition":"The process where a lender sells pledged collateral after a loan default. Proceeds reduce the outstanding balance before the SBA guaranty is called.","url":"https://dealroom.so/glossary/collateral-disposition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"orderly-liquidation","url":"https://dealroom.so/glossary/orderly-liquidation"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"}]},{"slug":"commercially-reasonable-method","term":"Commercially reasonable method","group":"Doing the deal","definition":"A standard requiring sensible, prudent actions in line with industry practices, especially when selling collateral. Lenders must follow this during liquidation.","url":"https://dealroom.so/glossary/commercially-reasonable-method","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"orderly-liquidation","url":"https://dealroom.so/glossary/orderly-liquidation"},{"slug":"collateral-disposition","url":"https://dealroom.so/glossary/collateral-disposition"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"broker-s-opinion-of-value","term":"Broker's opinion of value","aka":"BOV","group":"Reading the business","definition":"An informal estimate of a business's value by a broker, mainly for listing. Treat it as a starting point, not a definitive valuation for financing.","url":"https://dealroom.so/glossary/broker-s-opinion-of-value","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"formal-appraisal","url":"https://dealroom.so/glossary/formal-appraisal"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"competitive-bid","term":"Competitive bid","group":"Doing the deal","definition":"When multiple buyers vie for the same business, often driving up the price. As a buyer, you need to be prepared to make your best offer and show strong conviction.","url":"https://dealroom.so/glossary/competitive-bid","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"qualified-independent-business-valuation","term":"Qualified, independent business valuation","group":"Reading the business","definition":"An official report by an unbiased expert estimating the fair market value of the business. The SBA requires this for certain loan sizes to ensure you're not overpaying.","url":"https://dealroom.so/glossary/qualified-independent-business-valuation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"e-tran-authorization","term":"E-Tran authorization","group":"People and paperwork","definition":"The SBA's official approval of your loan application, detailing the final terms and conditions. This is the green light from the SBA to your lender to fund your loan.","url":"https://dealroom.so/glossary/e-tran-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"authorization-expiration-date","term":"Authorization expiration date","group":"People and paperwork","definition":"The deadline by which your SBA 7(a) loan must be fully disbursed to the seller. Missing this date can cause significant delays or even cancel the deal.","url":"https://dealroom.so/glossary/authorization-expiration-date","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"e-tran-authorization","url":"https://dealroom.so/glossary/e-tran-authorization"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"eligibility-denial","term":"Eligibility denial","group":"The loan itself","definition":"The SBA's refusal to guarantee a loan because the borrower or business doesn't meet program requirements. This is a deal-killer for SBA-backed financing.","url":"https://dealroom.so/glossary/eligibility-denial","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"financial-projection","term":"Financial projection","group":"Reading the business","definition":"A forecast of the business's future revenue, expenses, and profits. Lenders use this to assess your ability to repay the loan, especially for businesses with limited history or significant changes.","url":"https://dealroom.so/glossary/financial-projection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"eligibility-documentation","term":"Eligibility documentation","group":"People and paperwork","definition":"All the forms and information required by the SBA and your lender to confirm that you and the business qualify for a 7(a) loan. This is extensive and must be accurate.","url":"https://dealroom.so/glossary/eligibility-documentation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"business-debt-schedule","term":"Business debt schedule","group":"Reading the business","definition":"A detailed list of all existing loans and liabilities owed by the business. This helps you and the lender understand the total debt burden you're taking on or refinancing.","url":"https://dealroom.so/glossary/business-debt-schedule","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"wsj-prime-rate","term":"WSJ Prime Rate","group":"The loan itself","definition":"The benchmark interest rate published daily by The Wall Street Journal, used by most lenders to set the variable interest rate for SBA 7(a) loans. It directly impacts your monthly payments.","url":"https://dealroom.so/glossary/wsj-prime-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"}]},{"slug":"annual-oversight-fee","term":"Annual oversight fee","group":"The loan itself","definition":"An annual fee paid to the SBA for their ongoing oversight of your loan. This is a small percentage of the outstanding guaranteed balance, added to your monthly payments.","url":"https://dealroom.so/glossary/annual-oversight-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"outstanding-guaranteed-balance","url":"https://dealroom.so/glossary/outstanding-guaranteed-balance"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"outstanding-guaranteed-balance","term":"Outstanding guaranteed balance","group":"The loan itself","definition":"The portion of your SBA loan that the SBA has promised to repay to your lender if you default. This amount decreases as you pay down your loan.","url":"https://dealroom.so/glossary/outstanding-guaranteed-balance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"annual-oversight-fee","url":"https://dealroom.so/glossary/annual-oversight-fee"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"franchisor-franchisee-relationship","term":"Franchisor-franchisee relationship","group":"People and paperwork","definition":"The legal and operational agreement between the brand owner (franchisor) and the individual business owner (franchisee). The SBA has specific rules for these relationships.","url":"https://dealroom.so/glossary/franchisor-franchisee-relationship","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"passive-real-estate-activities","term":"Passive real estate activities","group":"Reading the business","definition":"Business activities primarily involving holding real estate for rent or investment, without significant operational involvement. The SBA generally won't guarantee loans for purely passive real estate.","url":"https://dealroom.so/glossary/passive-real-estate-activities","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"purchase-money-obligation","term":"Purchase money obligation","group":"The loan itself","definition":"Debt incurred specifically to finance the acquisition of an asset, where the asset itself serves as collateral for that debt. Your SBA loan is a purchase money obligation for the business.","url":"https://dealroom.so/glossary/purchase-money-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"real-estate-deed-of-trust","term":"Real estate deed of trust","group":"Doing the deal","definition":"This is a document used in some states (instead of a mortgage) to secure a loan with real estate. It transfers legal title to a neutral third party (trustee) until the loan is paid off.","url":"https://dealroom.so/glossary/real-estate-deed-of-trust","official_sources":[],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"}]},{"slug":"financial-accounting","term":"Financial accounting","group":"Reading the business","definition":"This is the system of recording, summarizing, and reporting financial transactions for a business. It's how you understand the company's past performance and current health.","url":"https://dealroom.so/glossary/financial-accounting","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"ability-to-repay","term":"Ability to repay","group":"The loan itself","definition":"This is the lender's assessment of whether your business's future cash flow can cover all its debt payments, including the SBA loan. It's the primary factor in loan approval.","url":"https://dealroom.so/glossary/ability-to-repay","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"industry-average","term":"Industry average","group":"Reading the business","definition":"These are typical financial ratios or performance metrics for businesses within a specific industry. They provide a benchmark to compare the target business against its peers.","url":"https://dealroom.so/glossary/industry-average","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"imprudent-lending","term":"Imprudent lending","group":"The loan itself","definition":"This refers to a lender making a loan without following sound underwriting practices or without sufficient assurance of repayment. The SBA can deny its guaranty if the lender acted imprudently.","url":"https://dealroom.so/glossary/imprudent-lending","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"non-guaranteed-loan","term":"Non-guaranteed loan","group":"The loan itself","definition":"This refers to the portion of an SBA loan that is not covered by the SBA's guaranty. For a 7(a) loan, the SBA typically guarantees 75-90% of the loan amount.","url":"https://dealroom.so/glossary/non-guaranteed-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"collateral-policy","term":"Collateral policy","group":"The loan itself","definition":"This is the set of rules and guidelines the SBA and lenders follow regarding what assets can secure a loan and how they are valued. It dictates what collateral is required for your 7(a) loan.","url":"https://dealroom.so/glossary/collateral-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"unencumbered-personal-real-estate","term":"Unencumbered personal real estate","group":"Your money in the deal","definition":"This is real estate you own personally that is free of any mortgages or liens. The SBA requires you to pledge it as additional collateral if your business assets don't fully secure the loan.","url":"https://dealroom.so/glossary/unencumbered-personal-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"second-mortgage","url":"https://dealroom.so/glossary/second-mortgage"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"credit-committee","term":"Credit committee","group":"People and paperwork","definition":"This is a group of senior banking officers responsible for reviewing and approving larger or more complex loan applications. They make the final decision on whether to fund your deal.","url":"https://dealroom.so/glossary/credit-committee","official_sources":[],"related":[{"slug":"credit-analyst","url":"https://dealroom.so/glossary/credit-analyst"},{"slug":"credit-approval-process","url":"https://dealroom.so/glossary/credit-approval-process"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"credit-approval-process","term":"Credit approval process","group":"Doing the deal","definition":"This is the step-by-step procedure a lender follows to evaluate your loan application, assess risk, and ultimately decide whether to approve your loan. It involves underwriting, analysis, and committee review.","url":"https://dealroom.so/glossary/credit-approval-process","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analyst","url":"https://dealroom.so/glossary/credit-analyst"},{"slug":"credit-committee","url":"https://dealroom.so/glossary/credit-committee"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"credit-analyst","term":"Credit analyst","group":"People and paperwork","definition":"This is the person at the bank who thoroughly reviews your loan application, financial statements, and business plan. They assess risk and make a recommendation to the credit committee.","url":"https://dealroom.so/glossary/credit-analyst","official_sources":[],"related":[{"slug":"credit-committee","url":"https://dealroom.so/glossary/credit-committee"},{"slug":"credit-approval-process","url":"https://dealroom.so/glossary/credit-approval-process"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"e-tran-modification","term":"E-Tran modification","group":"People and paperwork","definition":"E-Tran is the SBA's electronic system for lenders to submit loan applications and servicing actions. An E-Tran modification is an update or change made to an approved loan's terms within this system.","url":"https://dealroom.so/glossary/e-tran-modification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"lien-on-fixtures","term":"Lien on fixtures","group":"The loan itself","definition":"A lien on fixtures means the lender has a legal claim on items permanently attached to the business property, like built-in shelving or HVAC systems, as collateral for the loan.","url":"https://dealroom.so/glossary/lien-on-fixtures","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"landlord-s-waiver","term":"Landlord's waiver","group":"Doing the deal","definition":"This is an agreement signed by the landlord, allowing the lender to access and remove collateral from the leased premises if the business defaults on its loan.","url":"https://dealroom.so/glossary/landlord-s-waiver","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"right-of-first-refusal","term":"Right of First Refusal","aka":"ROFR","group":"Doing the deal","definition":"This clause gives a party the first chance to buy an asset or business if the owner decides to sell. For a buyer, it's a future option on a potential acquisition, but it can also limit your ability to sell later.","url":"https://dealroom.so/glossary/right-of-first-refusal","official_sources":[],"related":[{"slug":"alienate-the-business","url":"https://dealroom.so/glossary/alienate-the-business"},{"slug":"veto-power","url":"https://dealroom.so/glossary/veto-power"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"veto-power","term":"Veto Power","group":"Doing the deal","definition":"Veto power is the ability of a party to block certain business decisions, even if they're a minority owner. This directly impacts your control over the business you're buying.","url":"https://dealroom.so/glossary/veto-power","official_sources":[],"related":[{"slug":"right-of-first-refusal","url":"https://dealroom.so/glossary/right-of-first-refusal"},{"slug":"formal-amendment","url":"https://dealroom.so/glossary/formal-amendment"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"alienate-the-business","term":"Alienate the Business","group":"Doing the deal","definition":"To alienate the business means to sell, transfer, or otherwise dispose of its assets or ownership. As a buyer, be aware of any restrictions on your future ability to do this.","url":"https://dealroom.so/glossary/alienate-the-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"right-of-first-refusal","url":"https://dealroom.so/glossary/right-of-first-refusal"},{"slug":"full-release-of-personal-guaranty","url":"https://dealroom.so/glossary/full-release-of-personal-guaranty"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"employee-stock-ownership-plan","term":"Employee Stock Ownership Plan","aka":"ESOP","group":"Doing the deal","definition":"An ESOP is an employee benefit plan that gives workers ownership interest in the company. If the business you're buying has an ESOP, it adds complexity to the ownership structure and deal mechanics.","url":"https://dealroom.so/glossary/employee-stock-ownership-plan","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"valuation-threshold","term":"Valuation Threshold","group":"Reading the business","definition":"This is a specific value that triggers certain requirements or reviews for an SBA loan. For a buyer, knowing this helps you anticipate additional lender scrutiny or necessary reports.","url":"https://dealroom.so/glossary/valuation-threshold","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"principal-guarantor","term":"Principal Guarantor","group":"People and paperwork","definition":"A principal guarantor is an owner of 20% or more of the business who must personally guarantee the SBA loan. This means your personal assets are on the hook if the business defaults.","url":"https://dealroom.so/glossary/principal-guarantor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"full-release-of-personal-guaranty","term":"Full Release of Personal Guaranty","group":"Doing the deal","definition":"This is a document that legally frees a person from their personal liability on a loan. For the seller, it's crucial to get this from their old lender when you take over the business.","url":"https://dealroom.so/glossary/full-release-of-personal-guaranty","official_sources":[],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"payoff-letter","url":"https://dealroom.so/glossary/payoff-letter"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"formal-amendment","term":"Formal Amendment","group":"People and paperwork","definition":"A formal amendment is a written change or addition to a legal document, such as a loan agreement or purchase agreement. It legally modifies the original terms.","url":"https://dealroom.so/glossary/formal-amendment","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"payoff-letter","term":"Payoff Letter","group":"Doing the deal","definition":"A payoff letter is a formal document from a lender stating the exact amount needed to fully repay a loan on a specific date. This is critical for closing an acquisition.","url":"https://dealroom.so/glossary/payoff-letter","official_sources":[],"related":[{"slug":"lien-release","url":"https://dealroom.so/glossary/lien-release"},{"slug":"full-release-of-personal-guaranty","url":"https://dealroom.so/glossary/full-release-of-personal-guaranty"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"life-insurance-collateral-assignment","term":"Life Insurance Collateral Assignment","group":"The loan itself","definition":"This is when a life insurance policy is assigned to the lender as additional collateral for an SBA loan. It ensures the loan can be repaid if a key principal dies.","url":"https://dealroom.so/glossary/life-insurance-collateral-assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"}]},{"slug":"under-collateralized","term":"Under-Collateralized","group":"The loan itself","definition":"This describes a loan where the value of the assets pledged as security is less than the loan amount. Most SBA 7(a) loans are under-collateralized by design, focusing on cash flow.","url":"https://dealroom.so/glossary/under-collateralized","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"criminal-background-check","term":"Criminal Background Check","group":"People and paperwork","definition":"The SBA requires a criminal background check for all owners of 20% or more of the business. Certain past convictions can make you ineligible for a 7(a) loan.","url":"https://dealroom.so/glossary/criminal-background-check","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"lien-release","term":"Lien Release","group":"Doing the deal","definition":"A lien release is a document confirming that a lien, or a lender's claim on an asset, has been removed. This is essential for transferring clean title to assets.","url":"https://dealroom.so/glossary/lien-release","official_sources":[],"related":[{"slug":"payoff-letter","url":"https://dealroom.so/glossary/payoff-letter"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"application-for-guaranty","term":"Application for Guaranty","group":"People and paperwork","definition":"This is the form your lender submits to the SBA to request their guaranty on your 7(a) loan. It's a critical step in getting your loan approved.","url":"https://dealroom.so/glossary/application-for-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"personal-line-of-credit","term":"Personal line of credit","group":"Your money in the deal","definition":"A personal line of credit is a revolving credit facility you can draw from as needed. While it can be a source of personal funds, lenders scrutinize its use for equity injection.","url":"https://dealroom.so/glossary/personal-line-of-credit","official_sources":[],"related":[{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"title-report","term":"Title report","group":"People and paperwork","definition":"A title report details the ownership history and any liens or encumbrances on real estate. Buyers need this to confirm clear title and avoid hidden claims on property included in the deal.","url":"https://dealroom.so/glossary/title-report","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"junior-lien","term":"Junior lien","group":"The loan itself","definition":"A junior lien is a claim on collateral that is subordinate to another lien, meaning it gets paid only after the primary lienholder. As a buyer, you primarily care about the SBA loan's first lien position.","url":"https://dealroom.so/glossary/junior-lien","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"financial-covenant","term":"Financial covenant","group":"The loan itself","definition":"Specific conditions in your loan agreement require the business to maintain certain financial ratios or performance levels. Failing to meet these can trigger a loan default.","url":"https://dealroom.so/glossary/financial-covenant","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"federal-debt-default","term":"Federal debt default","group":"The loan itself","definition":"Failing to repay any debt owed to the U.S. government, including past student loans, tax obligations, or prior SBA loans. This makes you ineligible for a new SBA loan.","url":"https://dealroom.so/glossary/federal-debt-default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"robs-transaction","term":"ROBS transaction","aka":"Rollover for Business Startups transaction","group":"Your money in the deal","definition":"A specific method allowing you to use your 401(k) or other retirement funds to finance a business purchase without incurring taxes or penalties. It's a complex but powerful equity injection strategy.","url":"https://dealroom.so/glossary/robs-transaction","official_sources":[],"related":[{"slug":"401-k-plan","url":"https://dealroom.so/glossary/401-k-plan"},{"slug":"robs-facilitator","url":"https://dealroom.so/glossary/robs-facilitator"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"401-k-plan","term":"401(k) plan","group":"Your money in the deal","definition":"A retirement savings plan allowing employees to contribute a portion of their salary pre-tax. It's relevant as a potential source of funds for your equity injection through a ROBS transaction.","url":"https://dealroom.so/glossary/401-k-plan","official_sources":[],"related":[{"slug":"robs-transaction","url":"https://dealroom.so/glossary/robs-transaction"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"robs-facilitator","url":"https://dealroom.so/glossary/robs-facilitator"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"robs-facilitator","term":"ROBS facilitator","group":"People and paperwork","definition":"A specialized professional who guides you through the complex process of using retirement funds to buy a business via a ROBS transaction. Their expertise is critical for IRS compliance.","url":"https://dealroom.so/glossary/robs-facilitator","official_sources":[],"related":[{"slug":"robs-transaction","url":"https://dealroom.so/glossary/robs-transaction"},{"slug":"401-k-plan","url":"https://dealroom.so/glossary/401-k-plan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"firrea","term":"FIRREA","aka":"Financial Institutions Reform, Recovery, and Enforcement Act","group":"People and paperwork","definition":"A federal law enacted in 1989 to reform the financial industry and strengthen regulatory oversight of banks and savings institutions. It impacts how lenders are regulated and how they conduct business.","url":"https://dealroom.so/glossary/firrea","official_sources":[],"related":[{"slug":"lender","url":"https://dealroom.so/glossary/lender"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"forensic-audit","term":"Forensic audit","group":"Reading the business","definition":"A detailed examination of financial records to uncover discrepancies, fraud, or hidden financial issues. It goes beyond a standard audit, looking for specific evidence of wrongdoing or misrepresentation.","url":"https://dealroom.so/glossary/forensic-audit","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"securitizing","term":"Securitizing","group":"The loan itself","definition":"The process of pooling loans, like SBA loans, and converting them into marketable securities that can be sold to investors. This allows lenders to free up capital for more lending.","url":"https://dealroom.so/glossary/securitizing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"pooling","url":"https://dealroom.so/glossary/pooling"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"},{"slug":"lender","url":"https://dealroom.so/glossary/lender"}]},{"slug":"servicer","term":"Servicer","group":"People and paperwork","definition":"The entity responsible for managing your loan after it closes, including collecting payments, handling escrow, and responding to borrower inquiries. Your lender may retain servicing or transfer it.","url":"https://dealroom.so/glossary/servicer","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"lender","url":"https://dealroom.so/glossary/lender"}]},{"slug":"colson-services-reporting-system","term":"Colson Services reporting system","aka":"Colson","group":"People and paperwork","definition":"The electronic system used by SBA lenders to report loan data, payments, and statuses to the SBA. It's how the SBA tracks the performance of its guaranteed loan portfolio.","url":"https://dealroom.so/glossary/colson-services-reporting-system","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"servicer","url":"https://dealroom.so/glossary/servicer"},{"slug":"lender","url":"https://dealroom.so/glossary/lender"}]},{"slug":"corporate-resolution","term":"Corporate resolution","group":"People and paperwork","definition":"A formal document recording a specific decision or action approved by a corporation's board of directors or shareholders. It grants authority for major business decisions.","url":"https://dealroom.so/glossary/corporate-resolution","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"credit-scoring","term":"Credit scoring","group":"The loan itself","definition":"Credit scoring is a system lenders use to assess a borrower's creditworthiness by assigning a numerical score based on their credit history. For you, a better score means lower risk to the lender and a higher chance of loan approval.","url":"https://dealroom.so/glossary/credit-scoring","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fico-sbss-score","url":"https://dealroom.so/glossary/fico-sbss-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"financial-spreads","term":"Financial spreads","group":"Reading the business","definition":"Financial spreads are a detailed breakdown and analysis of a business's financial statements over several years, often standardized by lenders. They help you and your lender understand the company's historical performance, trends, and financial health.","url":"https://dealroom.so/glossary/financial-spreads","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"equity-injection-verification","term":"Equity injection verification","group":"Your money in the deal","definition":"This is the process where your lender confirms you have the required down payment (equity injection) and that these funds are eligible for the SBA loan. It ensures your commitment and financial capacity for the deal.","url":"https://dealroom.so/glossary/equity-injection-verification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"add-back","term":"Add-back","group":"Reading the business","definition":"An add-back is an expense on a company's financial statements that is non-recurring or discretionary and will not exist under new ownership. Identifying add-backs helps you see the true profit potential and cash flow of the business for a new owner.","url":"https://dealroom.so/glossary/add-back","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"financial-spreads","url":"https://dealroom.so/glossary/financial-spreads"}]},{"slug":"small-business-administration","term":"Small Business Administration","aka":"SBA","group":"People and paperwork","definition":"The Small Business Administration (SBA) is a U.S. government agency that guarantees a portion of loans made by private lenders to small businesses. Its guarantee makes it easier for lenders to provide financing for acquisitions like yours.","url":"https://dealroom.so/glossary/small-business-administration","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"startup-business","term":"Startup business","aka":"Startup","group":"Reading the business","definition":"A startup business is a newly established company, typically with less than two years of operating history. While SBA 7(a) loans can fund startups, they are much harder to finance for acquisitions due to lack of historical performance.","url":"https://dealroom.so/glossary/startup-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"future-earnings","url":"https://dealroom.so/glossary/future-earnings"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"revenue","term":"Revenue","aka":"Sales, Top line","group":"Reading the business","definition":"Revenue is the total income a business generates from its sales of goods or services before any expenses are deducted. It's the top line on the Profit and Loss Statement and indicates the business's sales volume.","url":"https://dealroom.so/glossary/revenue","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"net-income","url":"https://dealroom.so/glossary/net-income"},{"slug":"financial-spreads","url":"https://dealroom.so/glossary/financial-spreads"},{"slug":"economic-index","url":"https://dealroom.so/glossary/economic-index"}]},{"slug":"net-income","term":"Net income","aka":"Profit, Bottom line","group":"Reading the business","definition":"Net income, or profit, is what's left after all expenses, including taxes, are deducted from revenue. It's the bottom line on the Profit and Loss Statement and shows the business's actual profitability.","url":"https://dealroom.so/glossary/net-income","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"revenue","url":"https://dealroom.so/glossary/revenue"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"fico-sbss-score","term":"FICO SBSS score","aka":"FICO Small Business Scoring Service score, SBSS score","group":"The loan itself","definition":"The FICO Small Business Scoring Service (SBSS) score is a numerical score used by SBA lenders to assess the credit risk of both the business and its principals. It's a key initial screening tool for 7(a) loan eligibility.","url":"https://dealroom.so/glossary/fico-sbss-score","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-scoring","url":"https://dealroom.so/glossary/credit-scoring"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"7-a-small-loan","url":"https://dealroom.so/glossary/7-a-small-loan"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"loan-packaging","term":"Loan packaging","group":"Doing the deal","definition":"Loan packaging is the process of compiling and organizing all necessary documents and information for an SBA loan application. A well-packaged loan application is crucial for efficient underwriting and approval.","url":"https://dealroom.so/glossary/loan-packaging","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"future-earnings","term":"Future earnings","group":"Reading the business","definition":"Future earnings refer to the projected profits or cash flow a business is expected to generate after you acquire it. Lenders use these projections to assess the business's ability to repay the loan.","url":"https://dealroom.so/glossary/future-earnings","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"qualified-alien-status","term":"Qualified Alien status","aka":"Qualified Alien","group":"People and paperwork","definition":"This refers to a specific immigration status that allows non-U.S. citizens to be eligible for certain federal benefits, including SBA loans. It's a key requirement for non-citizen borrowers.","url":"https://dealroom.so/glossary/qualified-alien-status","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"economic-index","term":"Economic index","group":"Reading the business","definition":"An economic index is a statistical measure that tracks changes in a specific sector or the overall economy, such as GDP or consumer confidence. These indices help you understand the broader market conditions affecting the business you're buying.","url":"https://dealroom.so/glossary/economic-index","official_sources":[],"related":[{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"north-american-industry-classification-system","term":"North American Industry Classification System","aka":"NAICS","group":"Reading the business","definition":"The North American Industry Classification System (NAICS) is a standard used by federal statistical agencies to classify business establishments into industry categories. It helps determine if a business meets SBA size standards and eligibility rules.","url":"https://dealroom.so/glossary/north-american-industry-classification-system","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"gift-funds","term":"Gift funds","group":"Your money in the deal","definition":"Money given to a buyer by an eligible donor (usually a close relative) to be used as part of their equity injection in an SBA loan. It reduces the cash you need to bring to the table yourself.","url":"https://dealroom.so/glossary/gift-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"bankruptcy-discharge","term":"Bankruptcy discharge","group":"People and paperwork","definition":"A court order that releases a debtor from personal liability for most debts included in a bankruptcy filing. It's a critical factor for your eligibility as an SBA loan borrower.","url":"https://dealroom.so/glossary/bankruptcy-discharge","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"discharge","url":"https://dealroom.so/glossary/discharge"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"}]},{"slug":"vehicle-title","term":"Vehicle title","group":"People and paperwork","definition":"A legal document proving ownership of a vehicle. If business vehicles are part of the sale, the lender will need to ensure clear title transfer to the new business entity.","url":"https://dealroom.so/glossary/vehicle-title","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"clean-title","url":"https://dealroom.so/glossary/clean-title"},{"slug":"proper-perfection","url":"https://dealroom.so/glossary/proper-perfection"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"asset-appraisal","term":"Asset appraisal","group":"Reading the business","definition":"An independent valuation of specific tangible assets, like equipment or inventory, to determine their fair market value. Lenders use this to assess the collateral backing the loan.","url":"https://dealroom.so/glossary/asset-appraisal","official_sources":[],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"phantom-equity","term":"Phantom equity","group":"Your money in the deal","definition":"This refers to funds that appear to be part of the buyer's equity injection but are actually derived from the business being acquired or from another loan that isn't properly disclosed. It's a major red flag for SBA lenders.","url":"https://dealroom.so/glossary/phantom-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"aggregate-limit","term":"Aggregate limit","group":"The loan itself","definition":"The maximum total dollar amount an individual or business can borrow across all SBA 7(a) loans. For a single borrower, this is currently $5 million.","url":"https://dealroom.so/glossary/aggregate-limit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"key-personnel","term":"Key personnel","group":"People and paperwork","definition":"Individuals whose skills and contributions are critical to the success and operation of the business. For an SBA loan, these are typically the owner-operators and any essential employees.","url":"https://dealroom.so/glossary/key-personnel","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"qualified-non-citizen-status","term":"Qualified non-citizen status","group":"People and paperwork","definition":"A specific immigration status (e.g., permanent resident, asylee) that allows a non-citizen to be eligible for certain federal benefits, including SBA loans.","url":"https://dealroom.so/glossary/qualified-non-citizen-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"certificate-of-naturalization","url":"https://dealroom.so/glossary/certificate-of-naturalization"}]},{"slug":"certificate-of-naturalization","term":"Certificate of Naturalization","group":"People and paperwork","definition":"An official document issued by the U.S. government proving that an individual has become a U.S. citizen through the naturalization process. This is accepted proof of citizenship for SBA loan eligibility.","url":"https://dealroom.so/glossary/certificate-of-naturalization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-non-citizen-status","url":"https://dealroom.so/glossary/qualified-non-citizen-status"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"lien-waiver","term":"Lien waiver","group":"Doing the deal","definition":"A document signed by a party (like a contractor or supplier) relinquishing their right to place a lien on a property or asset. It ensures the buyer takes assets free of undisclosed claims.","url":"https://dealroom.so/glossary/lien-waiver","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"clean-title","url":"https://dealroom.so/glossary/clean-title"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"proper-perfection","url":"https://dealroom.so/glossary/proper-perfection"}]},{"slug":"related-party","term":"Related party","group":"Reading the business","definition":"Individuals or entities connected to the seller or target business through ownership, family ties, or common control. Transactions with related parties often require extra scrutiny.","url":"https://dealroom.so/glossary/related-party","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"operational-risk","term":"Operational risk","group":"Reading the business","definition":"The potential for losses due to inadequate or failed internal processes, people, systems, or external events. It's about how the business runs day-to-day.","url":"https://dealroom.so/glossary/operational-risk","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"key-personnel","url":"https://dealroom.so/glossary/key-personnel"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"clean-title","term":"Clean title","group":"Doing the deal","definition":"A title to an asset (like real estate or a vehicle) that is free from any liens, encumbrances, or legal claims. It confirms clear ownership.","url":"https://dealroom.so/glossary/clean-title","official_sources":[],"related":[{"slug":"vehicle-title","url":"https://dealroom.so/glossary/vehicle-title"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-waiver","url":"https://dealroom.so/glossary/lien-waiver"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"proper-perfection","term":"Proper perfection","group":"Doing the deal","definition":"The legal process by which a lender establishes its security interest in collateral, making it enforceable against third parties. This typically involves filing a UCC-1 statement.","url":"https://dealroom.so/glossary/proper-perfection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"ucc-1-financing-statement","term":"UCC-1 financing statement","group":"Doing the deal","definition":"This is a public notice filed by a lender to claim a security interest in a borrower's assets. As a buyer, you need to ensure the seller's existing UCC-1s are released or properly addressed at closing.","url":"https://dealroom.so/glossary/ucc-1-financing-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"}]},{"slug":"primary-assignee","term":"Primary assignee","group":"People and paperwork","definition":"In the context of a life insurance policy, this is the first party designated to receive the policy's payout. For a 7(a) loan, the lender is often the primary assignee on your key-person life insurance.","url":"https://dealroom.so/glossary/primary-assignee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"}]},{"slug":"collateral-modification","term":"Collateral modification","group":"The loan itself","definition":"This is a change to the assets pledged as security for your loan after the initial agreement. It occurs if the value or nature of the collateral changes, or if additional collateral is needed.","url":"https://dealroom.so/glossary/collateral-modification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"}]},{"slug":"schedule-of-sources-and-uses","term":"Schedule of sources and uses","group":"Reading the business","definition":"This document details where all the money for the deal is coming from (sources) and how it will be spent (uses). It's crucial for understanding the financial structure of your acquisition.","url":"https://dealroom.so/glossary/schedule-of-sources-and-uses","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"cancellation-of-the-sba-guaranty","term":"Cancellation of the SBA guaranty","group":"The loan itself","definition":"This is when the SBA revokes its promise to reimburse the lender for a portion of your defaulted loan. It happens if the lender didn't follow SBA rules during origination or servicing.","url":"https://dealroom.so/glossary/cancellation-of-the-sba-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"rights-of-first-refusal","term":"Rights of first refusal","group":"Doing the deal","definition":"This is a contractual right giving a specific party the option to buy an asset or property before it can be offered to others. It can impact your ability to acquire certain assets or real estate.","url":"https://dealroom.so/glossary/rights-of-first-refusal","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"unsecured-loan","term":"Unsecured loan","group":"The loan itself","definition":"This is a loan not backed by specific collateral. While rare for 7(a) acquisition loans, some smaller business debts might be unsecured.","url":"https://dealroom.so/glossary/unsecured-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"}]},{"slug":"disbursing","term":"Disbursing","group":"Doing the deal","definition":"This is the process of releasing the loan funds to the seller, your business, and other parties at closing. It’s the final step that makes the acquisition official.","url":"https://dealroom.so/glossary/disbursing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"microloan","term":"Microloan","group":"The loan itself","definition":"This is a small business loan, typically under $50,000, administered by the SBA through intermediary lenders. It’s generally not used for larger business acquisitions.","url":"https://dealroom.so/glossary/microloan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"7-a-small-loan","url":"https://dealroom.so/glossary/7-a-small-loan"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"equipment-financing","term":"Equipment financing","group":"The loan itself","definition":"This is a type of loan specifically used to purchase business equipment. For an acquisition, it’s often part of a larger 7(a) loan package.","url":"https://dealroom.so/glossary/equipment-financing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"}]},{"slug":"refinance-existing-business-debt","term":"Refinance existing business debt","group":"The loan itself","definition":"This involves replacing a business's current loans with a new one, often to get better terms or consolidate multiple debts. It's a common use of a 7(a) loan in an acquisition.","url":"https://dealroom.so/glossary/refinance-existing-business-debt","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"alien-registration-number","term":"Alien Registration Number","group":"People and paperwork","definition":"This is a unique identifier assigned by U.S. Citizenship and Immigration Services (USCIS) to non-citizen residents. If you're a Qualified Alien, you'll need this for your loan application.","url":"https://dealroom.so/glossary/alien-registration-number","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"interest-rate-structure","term":"Interest rate structure","group":"The loan itself","definition":"This refers to how your loan's interest rate is determined, typically fixed or variable, and how it's calculated. It directly impacts your monthly loan payments.","url":"https://dealroom.so/glossary/interest-rate-structure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"}]},{"slug":"pre-qualification","term":"Pre-qualification","group":"Doing the deal","definition":"This is an initial assessment by a lender of your eligibility and likely loan amount based on preliminary financial information. It's a quick estimate, not a commitment.","url":"https://dealroom.so/glossary/pre-qualification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"financials","term":"Financials","group":"Reading the business","definition":"These are the core documents showing a business's financial health, like the P&L and Balance Sheet. You need them to understand performance and value the business.","url":"https://dealroom.so/glossary/financials","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"conventional-bank-loan","term":"Conventional bank loan","group":"The loan itself","definition":"This is a standard bank loan not backed by a government guaranty, unlike an SBA loan. They typically have stricter collateral requirements and less flexible terms.","url":"https://dealroom.so/glossary/conventional-bank-loan","official_sources":[],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"credit-elsewhere","term":"Credit elsewhere","group":"The loan itself","definition":"This SBA rule means you can't get a 7(a) loan if you can get a loan on reasonable terms from other sources without an SBA guaranty. It ensures the SBA only helps businesses that truly need it.","url":"https://dealroom.so/glossary/credit-elsewhere","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"conventional-bank-loan","url":"https://dealroom.so/glossary/conventional-bank-loan"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"pledge-collateral","term":"Pledge collateral","group":"Doing the deal","definition":"This is when you offer specific assets as security for a loan. If you default, the lender can seize and sell these assets to recover their money.","url":"https://dealroom.so/glossary/pledge-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"marketable-asset","term":"Marketable asset","group":"Reading the business","definition":"This is an asset that can be easily converted to cash at its fair market value. Examples include publicly traded stocks or bonds.","url":"https://dealroom.so/glossary/marketable-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-elsewhere","url":"https://dealroom.so/glossary/credit-elsewhere"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"subrogation","term":"Subrogation","group":"The loan itself","definition":"This is the legal right of the SBA, after paying a lender on a defaulted loan, to step into the lender's shoes and collect from the borrower or guarantors. It means you still owe the SBA directly.","url":"https://dealroom.so/glossary/subrogation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"}]},{"slug":"projections-for-growth","term":"Projections for growth","group":"Reading the business","definition":"These are your estimates of how the business will perform financially in the future. Lenders use them to evaluate the viability of your business plan and repayment capacity.","url":"https://dealroom.so/glossary/projections-for-growth","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"}]},{"slug":"participating-bank","term":"Participating bank","group":"People and paperwork","definition":"This is a bank that offers SBA-guaranteed loans. They originate and service the loan, with the SBA providing a partial guaranty to reduce the bank's risk.","url":"https://dealroom.so/glossary/participating-bank","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"credit-union","term":"Credit union","group":"People and paperwork","definition":"A non-profit financial institution owned by its members. They can offer business loans, including SBA loans, often with competitive rates.","url":"https://dealroom.so/glossary/credit-union","official_sources":[],"related":[{"slug":"participating-bank","url":"https://dealroom.so/glossary/participating-bank"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"conventional-bank-loan","url":"https://dealroom.so/glossary/conventional-bank-loan"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"working-capital-purposes","term":"Working capital purposes","group":"The loan itself","definition":"This refers to using loan funds to cover day-to-day operational expenses like inventory, payroll, or accounts payable. It ensures the business has enough liquidity post-acquisition.","url":"https://dealroom.so/glossary/working-capital-purposes","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"seasonal-financing","term":"Seasonal financing","group":"The loan itself","definition":"A type of loan specifically designed for businesses with fluctuating revenues due to seasonal demand. It helps bridge cash flow gaps during slower periods.","url":"https://dealroom.so/glossary/seasonal-financing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital-purposes","url":"https://dealroom.so/glossary/working-capital-purposes"},{"slug":"seasonal-business","url":"https://dealroom.so/glossary/seasonal-business"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"}]},{"slug":"ineligible-industry","term":"Ineligible industry","group":"The loan itself","definition":"Certain types of businesses are specifically excluded from receiving SBA loans due to their nature or ethical considerations. You cannot get a 7(a) loan for these.","url":"https://dealroom.so/glossary/ineligible-industry","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"speculative","url":"https://dealroom.so/glossary/speculative"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"real-estate-rental","url":"https://dealroom.so/glossary/real-estate-rental"}]},{"slug":"speculative","term":"Speculative","group":"The loan itself","definition":"This describes a business or activity whose success depends primarily on an uncertain future event or market fluctuations, rather than predictable operations. SBA loans generally do not fund Speculative ventures.","url":"https://dealroom.so/glossary/speculative","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"projections-for-growth","url":"https://dealroom.so/glossary/projections-for-growth"},{"slug":"ineligible-industry","url":"https://dealroom.so/glossary/ineligible-industry"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"real-estate-rental","term":"Real estate rental","group":"The loan itself","definition":"This refers to businesses primarily engaged in owning and renting out commercial or residential real estate. Most passive Real estate rental businesses are Ineligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/real-estate-rental","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-industry","url":"https://dealroom.so/glossary/ineligible-industry"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"passive-real-estate","url":"https://dealroom.so/glossary/passive-real-estate"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"renovation","term":"Renovation","group":"The loan itself","definition":"Renovation refers to improving existing structures, which SBA 7(a) loans can fund for your business. It matters because it impacts your total project costs and ensures your acquired property meets operational needs.","url":"https://dealroom.so/glossary/renovation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equipment-installation","url":"https://dealroom.so/glossary/equipment-installation"},{"slug":"owner-occupied-business-real-estate","url":"https://dealroom.so/glossary/owner-occupied-business-real-estate"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"owner-occupied-business-real-estate","term":"Owner-occupied business real estate","group":"The loan itself","definition":"This is commercial property where your small business occupies at least 51% of the space. It's a key eligibility requirement for using an SBA 7(a) loan to purchase real estate.","url":"https://dealroom.so/glossary/owner-occupied-business-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"land-purchase","url":"https://dealroom.so/glossary/land-purchase"},{"slug":"renovation","url":"https://dealroom.so/glossary/renovation"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"land-purchase","term":"Land purchase","group":"The loan itself","definition":"This involves buying land for your business operations, which an SBA 7(a) loan can finance if it's for an owner-occupied business. It's relevant if you plan new construction or expansion.","url":"https://dealroom.so/glossary/land-purchase","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-business-real-estate","url":"https://dealroom.so/glossary/owner-occupied-business-real-estate"},{"slug":"construction-loan-disbursement-schedule","url":"https://dealroom.so/glossary/construction-loan-disbursement-schedule"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"equipment-installation","term":"Equipment installation","group":"The loan itself","definition":"This covers the costs of setting up new or acquired machinery and fixtures necessary for your business operations. SBA 7(a) loans can include these expenses as part of the financing.","url":"https://dealroom.so/glossary/equipment-installation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"renovation","url":"https://dealroom.so/glossary/renovation"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"construction-loan-disbursement-schedule","term":"Construction loan disbursement schedule","group":"Doing the deal","definition":"This is a timeline detailing when funds from a loan for construction or renovation will be released, typically based on completed work stages. Buyers need to understand it to manage project cash flow and contractor payments.","url":"https://dealroom.so/glossary/construction-loan-disbursement-schedule","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"renovation","url":"https://dealroom.so/glossary/renovation"},{"slug":"land-purchase","url":"https://dealroom.so/glossary/land-purchase"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"closing-fee","term":"Closing fee","group":"Doing the deal","definition":"This is a collective term for various charges and expenses incurred at the final stage of a loan transaction. As a buyer, you need to account for these fees as part of your total project costs.","url":"https://dealroom.so/glossary/closing-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"discharged-felony-conviction","term":"Discharged felony conviction","group":"People and paperwork","definition":"This refers to a felony conviction where the sentence, parole, or probation has been completed. It's critical for SBA loan eligibility, as certain past convictions can disqualify you.","url":"https://dealroom.so/glossary/discharged-felony-conviction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"exclusionary-period","url":"https://dealroom.so/glossary/exclusionary-period"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"exclusionary-period","term":"Exclusionary period","group":"People and paperwork","definition":"This is a specific timeframe during which a person is ineligible for an SBA loan due to a past criminal conviction. It's a critical factor in determining your eligibility as a borrower.","url":"https://dealroom.so/glossary/exclusionary-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"discharged-felony-conviction","url":"https://dealroom.so/glossary/discharged-felony-conviction"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"income-statement","term":"Income statement","group":"Reading the business","definition":"This financial document summarizes a company's revenues, expenses, and profits or losses over a period, like a quarter or year. It's essential for understanding a business's historical profitability.","url":"https://dealroom.so/glossary/income-statement","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"common-officer","term":"Common officer","group":"People and paperwork","definition":"An individual holding management positions or ownership stakes in two or more businesses. This matters because it can trigger \"affiliation\" rules for SBA loans, meaning the businesses are treated as one for size standard purposes.","url":"https://dealroom.so/glossary/common-officer","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"key-employee","term":"Key employee","group":"Reading the business","definition":"An employee whose expertise, relationships, or performance is critical to the business's ongoing success. A buyer needs to identify these individuals to understand potential operational risks post-acquisition.","url":"https://dealroom.so/glossary/key-employee","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-recurring-event","url":"https://dealroom.so/glossary/non-recurring-event"},{"slug":"customer-concentration-analysis","url":"https://dealroom.so/glossary/customer-concentration-analysis"}]},{"slug":"combined-size-analysis","term":"Combined size analysis","group":"Reading the business","definition":"An SBA lender's assessment of whether a borrower, along with any affiliated businesses, meets the SBA's small business size standards. This is crucial for determining if the business is eligible for an SBA loan.","url":"https://dealroom.so/glossary/combined-size-analysis","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-officer","url":"https://dealroom.so/glossary/common-officer"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"mentor-prot-g-agreement","term":"Mentor-protégé agreement","group":"People and paperwork","definition":"A formal agreement under an SBA program where an experienced business (mentor) helps a smaller, often disadvantaged business (protégé) grow. This can create affiliation for SBA size standard purposes between the two businesses.","url":"https://dealroom.so/glossary/mentor-prot-g-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"joint-venture-agreement","url":"https://dealroom.so/glossary/joint-venture-agreement"},{"slug":"small-business-set-aside-contract","url":"https://dealroom.so/glossary/small-business-set-aside-contract"}]},{"slug":"small-business-set-aside-contract","term":"Small business set-aside contract","group":"Reading the business","definition":"Government contracts reserved exclusively for small businesses, typically under specific SBA programs like 8(a) or WOSB. These contracts are a significant revenue source for many small businesses.","url":"https://dealroom.so/glossary/small-business-set-aside-contract","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"mentor-prot-g-agreement","url":"https://dealroom.so/glossary/mentor-prot-g-agreement"},{"slug":"contract","url":"https://dealroom.so/glossary/contract"}]},{"slug":"joint-venture-agreement","term":"Joint venture agreement","group":"Doing the deal","definition":"A contractual arrangement where two or more parties combine resources for a specific project or business activity. For SBA purposes, a joint venture can lead to affiliation, impacting size standards.","url":"https://dealroom.so/glossary/joint-venture-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"contract","url":"https://dealroom.so/glossary/contract"},{"slug":"mentor-prot-g-agreement","url":"https://dealroom.so/glossary/mentor-prot-g-agreement"},{"slug":"small-business-set-aside-contract","url":"https://dealroom.so/glossary/small-business-set-aside-contract"}]},{"slug":"crime-involving-fraud","term":"Crime involving fraud","group":"People and paperwork","definition":"Any criminal offense where deception is used for personal gain or to cause loss to another. This is a red flag for SBA loan eligibility and character requirements.","url":"https://dealroom.so/glossary/crime-involving-fraud","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"moral-turpitude","url":"https://dealroom.so/glossary/moral-turpitude"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"debarred-from-federal-programs","url":"https://dealroom.so/glossary/debarred-from-federal-programs"}]},{"slug":"moral-turpitude","term":"Moral turpitude","group":"People and paperwork","definition":"Conduct that is considered contrary to community standards of justice, honesty, or good morals. SBA considers convictions for crimes involving moral turpitude when assessing a borrower's character and loan eligibility.","url":"https://dealroom.so/glossary/moral-turpitude","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"crime-involving-fraud","url":"https://dealroom.so/glossary/crime-involving-fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"customer-concentration-analysis","term":"Customer concentration analysis","group":"Reading the business","definition":"An evaluation of how much of a business's revenue comes from its largest customers. High concentration indicates risk, as losing one key customer could severely impact cash flow.","url":"https://dealroom.so/glossary/customer-concentration-analysis","official_sources":[],"related":[{"slug":"cash-flow-post-acquisition","url":"https://dealroom.so/glossary/cash-flow-post-acquisition"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-recurring-event","url":"https://dealroom.so/glossary/non-recurring-event"},{"slug":"key-employee","url":"https://dealroom.so/glossary/key-employee"}]},{"slug":"cash-flow-post-acquisition","term":"Cash flow post-acquisition","group":"Reading the business","definition":"The projected net cash generated by the business after all operating expenses, debt service, and owner compensation are paid, once you take over. This is the ultimate measure of the business's ability to support the loan and your salary.","url":"https://dealroom.so/glossary/cash-flow-post-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"}]},{"slug":"non-recurring-event","term":"Non-recurring event","group":"Reading the business","definition":"An unusual or one-time business transaction or expense that is not expected to happen again in the normal course of operations. These are often \"added back\" to earnings to show normalized profitability.","url":"https://dealroom.so/glossary/non-recurring-event","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"}]},{"slug":"contract","term":"Contract","group":"People and paperwork","definition":"A legally binding agreement between two or more parties, outlining their rights and obligations. In an acquisition, you'll review all significant contracts to understand ongoing commitments and revenue streams.","url":"https://dealroom.so/glossary/contract","official_sources":[],"related":[{"slug":"renewal-term","url":"https://dealroom.so/glossary/renewal-term"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"joint-venture-agreement","url":"https://dealroom.so/glossary/joint-venture-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"renewal-term","term":"Renewal term","group":"People and paperwork","definition":"The period for which a contract or lease agreement can be extended beyond its initial duration. Understanding renewal terms is vital for assessing the longevity of revenue streams and operational costs.","url":"https://dealroom.so/glossary/renewal-term","official_sources":[],"related":[{"slug":"contract","url":"https://dealroom.so/glossary/contract"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"customer-concentration-analysis","url":"https://dealroom.so/glossary/customer-concentration-analysis"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"fully-collateralize","term":"Fully collateralize","group":"The loan itself","definition":"When the total value of assets pledged as security for a loan equals or exceeds the loan amount. SBA loans often require all available business and personal assets to be pledged, even if they exceed the loan amount.","url":"https://dealroom.so/glossary/fully-collateralize","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"required-lien-position","term":"Required Lien Position","group":"The loan itself","definition":"This refers to the priority the SBA lender must have on the business's assets as collateral. A first lien position means the SBA lender gets paid first from those assets if the business defaults.","url":"https://dealroom.so/glossary/required-lien-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"recoverable-value","term":"Recoverable Value","group":"Reading the business","definition":"This is the estimated amount a lender could realistically get by selling the business's collateral if the loan defaults. It's a key part of how lenders assess risk.","url":"https://dealroom.so/glossary/recoverable-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"valuation-methodology","term":"Valuation Methodology","group":"Reading the business","definition":"This is the specific approach used to determine a business's fair market value, often based on income, assets, or market comparisons. It directly impacts your offer price.","url":"https://dealroom.so/glossary/valuation-methodology","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"non-essential-business-asset","term":"Non-Essential Business Asset","group":"Reading the business","definition":"These are assets owned by the business that aren't critical for its daily operations or revenue generation, such as excess cash or personal vehicles.","url":"https://dealroom.so/glossary/non-essential-business-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"owner-distribution","url":"https://dealroom.so/glossary/owner-distribution"}]},{"slug":"sba-s-financial-interest","term":"SBA's Financial Interest","group":"The loan itself","definition":"This refers to the portion of your loan that the SBA guarantees to the lender. It's the maximum amount the SBA would pay the lender if you default.","url":"https://dealroom.so/glossary/sba-s-financial-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"proceeds","term":"Proceeds","group":"The loan itself","definition":"These are the funds disbursed from your SBA loan. They must be used for specific, approved purposes outlined in your loan authorization.","url":"https://dealroom.so/glossary/proceeds","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"authorized-pipeline","term":"Authorized Pipeline","group":"The loan itself","definition":"This refers to loans that the SBA has officially approved and issued an Authorization for, but which haven't yet been fully disbursed or closed.","url":"https://dealroom.so/glossary/authorized-pipeline","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"guaranty-authority","term":"Guaranty Authority","group":"The loan itself","definition":"This is the power granted by the SBA to lenders to approve and process SBA loan guarantees. It dictates how quickly and independently a lender can act.","url":"https://dealroom.so/glossary/guaranty-authority","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"portfolio-management","term":"Portfolio Management","group":"The loan itself","definition":"This refers to the ongoing monitoring and servicing of a lender's entire collection of loans, including ensuring borrower compliance and addressing potential issues.","url":"https://dealroom.so/glossary/portfolio-management","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"loan-covenant","url":"https://dealroom.so/glossary/loan-covenant"}]},{"slug":"loan-covenant","term":"Loan Covenant","group":"The loan itself","definition":"These are specific conditions or promises you agree to in your loan agreement, beyond just making payments, to maintain the loan in good standing.","url":"https://dealroom.so/glossary/loan-covenant","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"material-deviation","url":"https://dealroom.so/glossary/material-deviation"}]},{"slug":"material-deviation","term":"Material Deviation","group":"Doing the deal","definition":"This is a significant change from what was originally presented or approved in your SBA loan application or authorization.","url":"https://dealroom.so/glossary/material-deviation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-covenant","url":"https://dealroom.so/glossary/loan-covenant"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"business-purpose","term":"Business Purpose","group":"The loan itself","definition":"This refers to the requirement that SBA loan funds must be used exclusively to start, acquire, or expand a legitimate for-profit business, not for personal use.","url":"https://dealroom.so/glossary/business-purpose","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"existing-liabilities","term":"Existing Liabilities","group":"Reading the business","definition":"These are the financial obligations or debts a business currently owes, such as accounts payable, outstanding loans, or deferred revenue.","url":"https://dealroom.so/glossary/existing-liabilities","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"owner-distribution","term":"Owner Distribution","group":"Reading the business","definition":"This is money paid out from the business's profits to its owners, distinct from salary or wages. It reduces the cash available to the business.","url":"https://dealroom.so/glossary/owner-distribution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"misapplication-of-loan-proceeds","term":"Misapplication of loan proceeds","group":"The loan itself","definition":"This is when loan funds are used for something other than what the SBA Loan Authorization specifies. If you divert funds, it's a serious violation that can lead to loan default and personal liability.","url":"https://dealroom.so/glossary/misapplication-of-loan-proceeds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"eligibility-issue","term":"Eligibility issue","group":"The loan itself","definition":"An eligibility issue means the business or borrower doesn't meet SBA's rules for a 7(a) loan. If discovered later, the SBA can deny its guaranty, leaving you solely responsible for the full loan.","url":"https://dealroom.so/glossary/eligibility-issue","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"e-tran-entry","term":"E-Tran entry","group":"Doing the deal","definition":"E-Tran is the SBA's online system where lenders submit loan applications and receive SBA Loan Authorizations. This is where your lender officially requests the SBA guaranty for your loan.","url":"https://dealroom.so/glossary/e-tran-entry","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"inadequate-due-diligence","term":"Inadequate due diligence","group":"Doing the deal","definition":"This is when a buyer fails to thoroughly investigate a business before purchase, missing critical risks or red flags. It leaves you vulnerable to unexpected liabilities or operational problems post-acquisition.","url":"https://dealroom.so/glossary/inadequate-due-diligence","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"reconciliation","url":"https://dealroom.so/glossary/reconciliation"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"reconciliation","term":"Reconciliation","group":"Reading the business","definition":"Reconciliation is the process of comparing different financial records to ensure they match and are accurate. You'll use this to verify the seller's reported numbers against bank statements and tax returns.","url":"https://dealroom.so/glossary/reconciliation","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"}]},{"slug":"rider","term":"Rider","group":"People and paperwork","definition":"A rider is an amendment or addition to an existing contract, modifying its terms without rewriting the whole document. You'll see these in lease agreements or loan documents to add specific conditions.","url":"https://dealroom.so/glossary/rider","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"restrictive-clause","url":"https://dealroom.so/glossary/restrictive-clause"},{"slug":"acceleration-clause","url":"https://dealroom.so/glossary/acceleration-clause"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"franchise-relationship","term":"Franchise relationship","group":"Reading the business","definition":"This refers to the legal and operational connection between a franchisee and the franchisor. Understanding this relationship is critical because it dictates how you can run the business.","url":"https://dealroom.so/glossary/franchise-relationship","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-eligibility-requirements","url":"https://dealroom.so/glossary/franchise-eligibility-requirements"}]},{"slug":"franchise-eligibility-requirements","term":"Franchise eligibility requirements","group":"The loan itself","definition":"These are specific SBA rules that a franchise system must meet for its units to qualify for 7(a) financing. Your loan relies on the franchisor meeting these standards.","url":"https://dealroom.so/glossary/franchise-eligibility-requirements","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-relationship","url":"https://dealroom.so/glossary/franchise-relationship"},{"slug":"eligibility-issue","url":"https://dealroom.so/glossary/eligibility-issue"}]},{"slug":"environmentally-sensitive-industry","term":"Environmentally Sensitive Industry","group":"The loan itself","definition":"This is an industry identified by the SBA as having a higher potential for environmental contamination or regulatory issues. Businesses in these industries require extra environmental due diligence for an SBA loan.","url":"https://dealroom.so/glossary/environmentally-sensitive-industry","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"hazardous-material-use","url":"https://dealroom.so/glossary/hazardous-material-use"}]},{"slug":"hazardous-material-use","term":"Hazardous material use","group":"Reading the business","definition":"This refers to the handling, storage, or disposal of any materials that pose a risk to health or the environment. It triggers environmental review and potential liability for the buyer.","url":"https://dealroom.so/glossary/hazardous-material-use","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmentally-sensitive-industry","url":"https://dealroom.so/glossary/environmentally-sensitive-industry"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"restrictive-clause","term":"Restrictive clause","group":"People and paperwork","definition":"A restrictive clause limits one party's actions within a contract. In your loan documents or lease, it could limit your business operations or your ability to sell assets.","url":"https://dealroom.so/glossary/restrictive-clause","official_sources":[],"related":[{"slug":"rider","url":"https://dealroom.so/glossary/rider"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"acceleration-clause","term":"Acceleration clause","group":"People and paperwork","definition":"This clause in a loan agreement allows the lender to demand immediate repayment of the entire outstanding loan balance if certain conditions (defaults) are met. It's a critical risk to understand.","url":"https://dealroom.so/glossary/acceleration-clause","official_sources":[],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"senior-debt","term":"Senior debt","group":"The loan itself","definition":"Senior debt is borrowing that takes priority over all other debts if the business goes bankrupt or liquidates. Your SBA 7(a) loan is typically considered senior debt.","url":"https://dealroom.so/glossary/senior-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"full-subordination","url":"https://dealroom.so/glossary/full-subordination"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"full-subordination","term":"Full Subordination","group":"Your money in the deal","definition":"Full subordination means a debt, usually a seller note, is placed in a secondary position to the SBA loan, making it subordinate to the SBA lender's claim. This bolsters the SBA loan's collateral position.","url":"https://dealroom.so/glossary/full-subordination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"guaranty-approval","term":"Guaranty Approval","group":"Doing the deal","definition":"This is the SBA's formal approval of your loan application, committing to back a portion of the loan. It's crucial because without it, your 7(a) loan cannot close.","url":"https://dealroom.so/glossary/guaranty-approval","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"basis-point","term":"Basis Point","aka":"bp","group":"The loan itself","definition":"A basis point is one-hundredth of a percentage point (0.01%). It's used to describe small changes in interest rates or other financial percentages.","url":"https://dealroom.so/glossary/basis-point","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"interest-only-payment-period","url":"https://dealroom.so/glossary/interest-only-payment-period"}]},{"slug":"fully-disbursed","term":"Fully Disbursed","group":"Doing the deal","definition":"A loan is fully disbursed when all the approved loan funds have been paid out to the borrower and seller. This marks the end of the funding process for your acquisition.","url":"https://dealroom.so/glossary/fully-disbursed","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"registered-pool-assembler","term":"Registered Pool Assembler","group":"People and paperwork","definition":"A financial institution approved by the SBA to create \"pools\" of SBA-guaranteed loans for sale on the secondary market. They package the guaranteed portions of loans.","url":"https://dealroom.so/glossary/registered-pool-assembler","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"secondary-participation-guaranty-agreement","term":"Secondary Participation Guaranty Agreement","group":"People and paperwork","definition":"This is an agreement governing the sale of the SBA-guaranteed portion of a loan by the original lender to a secondary market investor. It outlines the terms of this sale.","url":"https://dealroom.so/glossary/secondary-participation-guaranty-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"interest-only-payment-period","term":"Interest-Only Payment Period","group":"The loan itself","definition":"A temporary period where your loan payments only cover the interest accrued, not any principal. This can provide some initial cash flow relief for your new business.","url":"https://dealroom.so/glossary/interest-only-payment-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"}]},{"slug":"cure-the-default","term":"Cure the Default","group":"Doing the deal","definition":"To remedy a loan default by fulfilling the missed obligations, typically by making overdue payments or correcting a breach of loan terms. This prevents further lender action.","url":"https://dealroom.so/glossary/cure-the-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"notice-of-default","url":"https://dealroom.so/glossary/notice-of-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"diligent-servicing-action","url":"https://dealroom.so/glossary/diligent-servicing-action"}]},{"slug":"diligent-servicing-action","term":"Diligent Servicing Action","group":"Doing the deal","definition":"The steps a lender must take to service an SBA loan, especially when it's in default, to protect the SBA's interest. This ensures the lender follows proper procedures.","url":"https://dealroom.so/glossary/diligent-servicing-action","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"}]},{"slug":"notice-of-default","term":"Notice of Default","group":"Doing the deal","definition":"A formal written notification from your lender stating that your loan is in default due to missed payments or other breaches of the loan agreement. It's a serious warning.","url":"https://dealroom.so/glossary/notice-of-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"cure-the-default","url":"https://dealroom.so/glossary/cure-the-default"},{"slug":"demand-for-payment","url":"https://dealroom.so/glossary/demand-for-payment"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"demand-for-payment","term":"Demand for Payment","group":"Doing the deal","definition":"A formal notice from the lender demanding immediate repayment of the entire outstanding loan balance, usually issued after a loan default is not cured. This is a critical step before collection.","url":"https://dealroom.so/glossary/demand-for-payment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"notice-of-default","url":"https://dealroom.so/glossary/notice-of-default"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"cure-the-default","url":"https://dealroom.so/glossary/cure-the-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"voluntary-surrender-of-collateral","term":"Voluntary Surrender of Collateral","group":"Doing the deal","definition":"When a borrower, facing a defaulted loan, chooses to hand over the collateral to the lender to satisfy the debt, rather than forcing foreclosure or repossession.","url":"https://dealroom.so/glossary/voluntary-surrender-of-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"collateral-appraisal","term":"Collateral Appraisal","group":"Reading the business","definition":"An independent valuation of the assets pledged as collateral for your loan, determining their fair market value. This ensures the lender knows the recovery value in case of default.","url":"https://dealroom.so/glossary/collateral-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"pyramid-sales","term":"Pyramid Sales","aka":"Pyramid scheme","group":"Reading the business","definition":"A fraudulent business model where participants profit primarily from recruiting new members, not from selling legitimate products or services. It's an illegal and unsustainable scheme.","url":"https://dealroom.so/glossary/pyramid-sales","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"multi-level-marketing-company","url":"https://dealroom.so/glossary/multi-level-marketing-company"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"material-modification","term":"Material Modification","group":"Doing the deal","definition":"A significant change to the terms or conditions of an SBA loan after it's been authorized or disbursed. 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It's usually considered when assessing your overall financial strength.","url":"https://dealroom.so/glossary/non-business-income","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"net-cash-flow","term":"Net cash flow","group":"Reading the business","definition":"This is the actual cash a business generates or uses over a period, after all expenses, taxes, and debt payments. 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This reduces risk for the lender, making them more willing to lend.","url":"https://dealroom.so/glossary/government-backed-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"lender","url":"https://dealroom.so/glossary/lender"},{"slug":"collateral-requirement","url":"https://dealroom.so/glossary/collateral-requirement"}]},{"slug":"lender","term":"Lender","group":"People and paperwork","definition":"This is the financial institution, such as a bank or credit union, that provides the SBA loan funds to you, the borrower. They underwrite, approve, and service your loan.","url":"https://dealroom.so/glossary/lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"commercial-bank","url":"https://dealroom.so/glossary/commercial-bank"},{"slug":"community-bank","url":"https://dealroom.so/glossary/community-bank"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"repayment-period","term":"Repayment period","group":"The loan itself","definition":"This is the total length of time, or term, over which you are scheduled to pay back your SBA loan, including both principal and interest.","url":"https://dealroom.so/glossary/repayment-period","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"collateral-requirement","term":"Collateral requirement","group":"The loan itself","definition":"This refers to the assets the lender requires you to pledge as security for the loan. If you default, the lender can seize and sell these assets.","url":"https://dealroom.so/glossary/collateral-requirement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"sound-business-purpose","term":"Sound business purpose","group":"The loan itself","definition":"This SBA requirement means the loan proceeds must be used for a legitimate, viable business activity that benefits the small business. It prevents misuse of funds.","url":"https://dealroom.so/glossary/sound-business-purpose","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"eligible-business-purpose","url":"https://dealroom.so/glossary/eligible-business-purpose"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"eligible-business-purpose","term":"Eligible business purpose","group":"The loan itself","definition":"This refers to the specific uses of SBA loan funds that are permitted by the SBA's regulations. Not all business expenses qualify for SBA financing.","url":"https://dealroom.so/glossary/eligible-business-purpose","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sound-business-purpose","url":"https://dealroom.so/glossary/sound-business-purpose"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"community-bank","term":"Community bank","group":"People and paperwork","definition":"This is a smaller, locally focused financial institution that often specializes in serving local businesses and communities. They can be strong SBA partners.","url":"https://dealroom.so/glossary/community-bank","official_sources":[],"related":[{"slug":"lender","url":"https://dealroom.so/glossary/lender"},{"slug":"commercial-bank","url":"https://dealroom.so/glossary/commercial-bank"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"loan-to-value-ratio","term":"Loan-to-value ratio","aka":"LTV","group":"The loan itself","definition":"How much the loan covers compared to the value of the assets being purchased or used as collateral. Buyers care because a lower ratio means more equity injection is needed, but also stronger loan approval prospects.","url":"https://dealroom.so/glossary/loan-to-value-ratio","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"customary-fee","term":"Customary fee","group":"Doing the deal","definition":"These are standard fees charged by a lender for originating and closing a loan. Buyers need to budget for these, as they are part of your overall deal costs and can impact your equity injection.","url":"https://dealroom.so/glossary/customary-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"acquisition","term":"Acquisition","group":"Doing the deal","definition":"This is simply the act of buying an existing business. For you, it means taking over an operational entity, its assets, and often its liabilities, with the goal of continuing or growing its operations.","url":"https://dealroom.so/glossary/acquisition","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"disposable-income","term":"Disposable income","group":"Reading the business","definition":"This is the income left over after paying all essential expenses and taxes. For a small business owner relying on the business for salary, it's about how much the business can actually pay you.","url":"https://dealroom.so/glossary/disposable-income","official_sources":[],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"commercial-loan","term":"Commercial loan","group":"The loan itself","definition":"This is a loan provided to businesses, not individuals, for business purposes like acquisitions, working capital, or equipment. SBA 7(a) loans are a specific type of commercial loan with a government guarantee.","url":"https://dealroom.so/glossary/commercial-loan","official_sources":[],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"sba-approved-lender","term":"SBA-approved lender","group":"People and paperwork","definition":"This is a bank or financial institution authorized by the Small Business Administration to originate and service SBA-guaranteed loans. You can only get an SBA loan from one of these.","url":"https://dealroom.so/glossary/sba-approved-lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"diversion-of-funds","term":"Diversion of funds","group":"Doing the deal","definition":"This is when loan proceeds are used for purposes other than what was approved in the loan authorization. It's a serious violation and can lead to immediate default, jeopardizing your deal.","url":"https://dealroom.so/glossary/diversion-of-funds","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"disbursement-control","url":"https://dealroom.so/glossary/disbursement-control"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"standby-seller-note","term":"Standby seller note","group":"Your money in the deal","definition":"This is a portion of the purchase price financed by the seller, where the seller agrees not to receive payments until the SBA loan is fully repaid. It counts as part of your required equity.","url":"https://dealroom.so/glossary/standby-seller-note","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"liabilities","term":"Liabilities","group":"Reading the business","definition":"These are the financial obligations or debts a business owes to others, like accounts payable or existing loans. Buyers must identify and understand all liabilities to assess the true financial health of the business.","url":"https://dealroom.so/glossary/liabilities","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"liquid-assets","term":"Liquid assets","group":"Reading the business","definition":"These are assets that can be quickly converted into cash with minimal loss in value, like cash in bank accounts. They indicate a business's ability to cover short-term obligations.","url":"https://dealroom.so/glossary/liquid-assets","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"annual-receipts","term":"Annual receipts","group":"Reading the business","definition":"This refers to the total income or revenue a business receives from its operations over a fiscal year. It's a key metric for determining if a business meets SBA size standards for a loan.","url":"https://dealroom.so/glossary/annual-receipts","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"eligibility","url":"https://dealroom.so/glossary/eligibility"}]},{"slug":"disbursement-control","term":"Disbursement control","group":"Doing the deal","definition":"This is the process by which the lender manages and releases loan funds only for approved purposes, ensuring compliance with the loan authorization. It protects both the lender and the SBA from misuse.","url":"https://dealroom.so/glossary/disbursement-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"diversion-of-funds","url":"https://dealroom.so/glossary/diversion-of-funds"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"sba-oversight","term":"SBA oversight","group":"People and paperwork","definition":"This refers to the Small Business Administration's role in regulating and monitoring its loan programs and participating lenders. It ensures compliance with rules and protects the government's guarantee.","url":"https://dealroom.so/glossary/sba-oversight","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"compensating-factor","term":"Compensating factor","group":"Reading the business","definition":"This is a positive aspect of a loan application that helps offset a perceived weakness, making the deal more attractive to a lender. It strengthens your overall creditworthiness for approval.","url":"https://dealroom.so/glossary/compensating-factor","official_sources":[],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"non-passive-activity","term":"Non-passive activity","group":"Reading the business","definition":"This means the buyer must be actively involved in the day-to-day operations of the business. The SBA wants owners who run their businesses, not just invest in them, to ensure loan repayment capacity.","url":"https://dealroom.so/glossary/non-passive-activity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba","url":"https://dealroom.so/glossary/sba"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"pretrial-diversion-program","term":"Pretrial diversion program","group":"People and paperwork","definition":"This is an alternative to prosecution for certain offenses, often involving conditions like community service. It matters because the SBA checks your criminal history as part of its 'Good Character' requirements.","url":"https://dealroom.so/glossary/pretrial-diversion-program","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"sba","url":"https://dealroom.so/glossary/sba"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"beneficiaries","term":"Beneficiaries","group":"People and paperwork","definition":"These are the individuals or entities designated to receive benefits, often from a life insurance policy. For an SBA loan, the lender is typically a beneficiary on your key-man life insurance.","url":"https://dealroom.so/glossary/beneficiaries","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"}]},{"slug":"required-guarantor","term":"Required guarantor","group":"People and paperwork","definition":"Anyone owning 20% or more of the borrowing entity must personally guarantee the SBA loan. This ensures that significant owners are personally on the hook for the debt.","url":"https://dealroom.so/glossary/required-guarantor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba","url":"https://dealroom.so/glossary/sba"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"e-2-investor-visa","term":"E-2 investor visa","group":"People and paperwork","definition":"This is a non-immigrant visa for treaty investors from certain countries who invest a substantial amount of capital in a U.S. business. It's a key visa for foreign nationals looking to buy a business with an SBA loan.","url":"https://dealroom.so/glossary/e-2-investor-visa","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"year-end-financial-statements","term":"Year-end financial statements","group":"Reading the business","definition":"These are the financial reports—typically a Balance Sheet and Profit and Loss Statement—prepared at the close of a business's fiscal year. They are crucial for understanding a business's historical performance.","url":"https://dealroom.so/glossary/year-end-financial-statements","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"acceleration-rights","term":"Acceleration rights","group":"The loan itself","definition":"This is a clause in your loan agreement allowing the lender to demand immediate repayment of the entire outstanding loan balance if you default. It's how lenders protect themselves when a borrower fails to meet terms.","url":"https://dealroom.so/glossary/acceleration-rights","official_sources":[],"related":[{"slug":"defaulted-loan","url":"https://dealroom.so/glossary/defaulted-loan"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"subordinated-in-payment","term":"Subordinated in payment","group":"Your money in the deal","definition":"This means a debt, like a seller note, is legally junior to the SBA loan. The SBA lender gets paid first in case of default, ensuring their primary position.","url":"https://dealroom.so/glossary/subordinated-in-payment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"holder-of-the-note","term":"Holder of the Note","group":"People and paperwork","definition":"This is the legal entity that owns the promissory note and is entitled to receive payments from the borrower. It's typically the lender who originated your SBA loan.","url":"https://dealroom.so/glossary/holder-of-the-note","official_sources":[],"related":[{"slug":"note","url":"https://dealroom.so/glossary/note"},{"slug":"primary-servicer","url":"https://dealroom.so/glossary/primary-servicer"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"primary-servicer","term":"Primary servicer","group":"People and paperwork","definition":"This is the entity responsible for managing the day-to-day operations of your loan, including collecting payments and handling inquiries. For an SBA loan, your lender is usually the primary servicer.","url":"https://dealroom.so/glossary/primary-servicer","official_sources":[],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"guaranty-claim","term":"Guaranty claim","group":"Doing the deal","definition":"This is the request a lender makes to the SBA to pay out on the SBA's guaranty when a loan defaults and cannot be fully recovered. It's the lender's recourse for a bad loan.","url":"https://dealroom.so/glossary/guaranty-claim","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"defaulted-loan","url":"https://dealroom.so/glossary/defaulted-loan"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"}]},{"slug":"owner-s-withdrawals","term":"Owner's withdrawals","group":"Reading the business","definition":"These are funds taken out of a business by its owner, not as salary or dividends, but as direct draws. They are critical for understanding how much cash the business truly generates for an owner.","url":"https://dealroom.so/glossary/owner-s-withdrawals","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"year-end-financial-statements","url":"https://dealroom.so/glossary/year-end-financial-statements"}]},{"slug":"defaulted-loan","term":"Defaulted loan","group":"The loan itself","definition":"A loan is defaulted when the borrower fails to meet the terms of the loan agreement, most commonly by missing payments. This triggers serious consequences for both the borrower and the lender.","url":"https://dealroom.so/glossary/defaulted-loan","official_sources":[],"related":[{"slug":"acceleration-rights","url":"https://dealroom.so/glossary/acceleration-rights"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"sba","term":"SBA","aka":"U.S. Small Business Administration","group":"People and paperwork","definition":"The U.S. Small Business Administration is a federal agency that provides support to entrepreneurs and small businesses. Its primary role in your deal is guaranteeing a portion of your business acquisition loan.","url":"https://dealroom.so/glossary/sba","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"direct-lender","term":"Direct Lender","group":"People and paperwork","definition":"A direct lender is a financial institution that funds loans directly to borrowers, rather than brokering them to other banks. This means you're dealing straight with the bank making the final decision, often streamlining communication.","url":"https://dealroom.so/glossary/direct-lender","official_sources":[],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"community-reinvestment-act-objectives","term":"Community Reinvestment Act Objectives","group":"People and paperwork","definition":"The Community Reinvestment Act (CRA) encourages banks to meet the credit needs of low- and moderate-income communities. While not directly impacting your SBA loan eligibility as a borrower, it shapes which banks are active in certain areas.","url":"https://dealroom.so/glossary/community-reinvestment-act-objectives","official_sources":[],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"working-capital-projections","term":"Working Capital Projections","group":"Reading the business","definition":"These are forecasts of the cash a business needs to cover its day-to-day operations after an acquisition, beyond the purchase price. Accurate projections ensure the business has enough liquidity to operate smoothly post-closing.","url":"https://dealroom.so/glossary/working-capital-projections","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"501-c-3-non-profit","term":"501(c)(3) Non-Profit","group":"Reading the business","definition":"This tax status designates an organization as a non-profit, exempt from federal income tax. An SBA 7(a) loan cannot be used to purchase a business with this structure, as they are generally ineligible.","url":"https://dealroom.so/glossary/501-c-3-non-profit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"repayment-agreement","term":"Repayment Agreement","group":"Doing the deal","definition":"A repayment agreement is a formal contract detailing the terms by which a debt will be repaid. 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It's a key indicator of your financial responsibility for any loan.","url":"https://dealroom.so/glossary/personal-fico-score","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-profile","url":"https://dealroom.so/glossary/credit-profile"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"credit-profile","term":"Credit Profile","group":"Reading the business","definition":"Your credit profile is a comprehensive summary of your borrowing and repayment history, including all personal and business debts. 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It shows principal and interest payments over time, providing a clear picture of future debt obligations.","url":"https://dealroom.so/glossary/debt-schedule","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"cash-reserve","term":"Cash Reserve","group":"Your money in the deal","definition":"A cash reserve is liquid funds held aside for unexpected expenses, working capital needs, or emergencies after an acquisition. 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It reflects the strength and recognition of a company's name and reputation.","url":"https://dealroom.so/glossary/brand-equity","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"indictment","term":"Indictment","group":"People and paperwork","definition":"An indictment is a formal accusation by a grand jury that there is enough evidence to bring criminal charges. If you or a key principal face an indictment, it impacts your eligibility for an SBA loan.","url":"https://dealroom.so/glossary/indictment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"misdemeanor-conviction","url":"https://dealroom.so/glossary/misdemeanor-conviction"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"misdemeanor-conviction","term":"Misdemeanor Conviction","group":"People and paperwork","definition":"A misdemeanor conviction is a conviction for a less serious crime than a felony. 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The SBA scrutinizes these deals closely.","url":"https://dealroom.so/glossary/identity-of-interest-transaction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"default-provision","term":"Default Provision","group":"The loan itself","definition":"This clause in your loan agreement outlines specific events or failures that trigger a loan default, allowing the lender to demand immediate repayment. You need to understand what constitutes a default to avoid losing the business.","url":"https://dealroom.so/glossary/default-provision","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"}]},{"slug":"pre-qualify","term":"Pre-qualify","group":"Doing the deal","definition":"Pre-qualifying means a lender gives an initial, informal assessment of your eligibility for a loan based on basic financial information. It gives you a sense of your borrowing power before you commit to a specific business.","url":"https://dealroom.so/glossary/pre-qualify","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"}]},{"slug":"asset","term":"Asset","group":"Reading the business","definition":"An asset is anything of economic value owned by the business, like cash, equipment, inventory, or intellectual property. 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These lenders specialize in SBA loans, often processing them faster than traditional banks.","url":"https://dealroom.so/glossary/small-business-lending-company","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"current-liability","term":"Current Liability","group":"Reading the business","definition":"A current liability is an obligation due within one year, like accounts payable, short-term debt, or accrued expenses. These are important for buyers to assess a business's short-term financial health and working capital needs.","url":"https://dealroom.so/glossary/current-liability","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"undisclosed-lien","term":"Undisclosed Lien","group":"Doing the deal","definition":"An undisclosed lien is a legal claim against an asset that isn't openly declared by the seller. This can be a major problem for buyers, as it means someone else has a right to the assets you're trying to buy.","url":"https://dealroom.so/glossary/undisclosed-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"profit-loss","term":"Profit & Loss","aka":"P&L","group":"Reading the business","definition":"The Profit & Loss statement shows a business's revenues, expenses, and net profit or loss over a period. It's critical for buyers to understand a company's historical financial performance and profitability.","url":"https://dealroom.so/glossary/profit-loss","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"additional-guaranty-fee","term":"Additional guaranty fee","group":"The loan itself","definition":"This is an upfront fee charged by the SBA to guarantee a portion of your 7(a) loan, beyond the standard fees. It's often required for loans exceeding a certain size, increasing your total project costs.","url":"https://dealroom.so/glossary/additional-guaranty-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"alien-registration-card","term":"Alien Registration Card","aka":"Green Card","group":"People and paperwork","definition":"An Alien Registration Card, or Green Card, is a document issued by USCIS to immigrants providing permanent residency in the U.S. If you're not a U.S. citizen, having this is crucial for SBA loan eligibility.","url":"https://dealroom.so/glossary/alien-registration-card","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"alternative-reference-rates-committee","term":"Alternative Reference Rates Committee","aka":"ARRC","group":"People and paperwork","definition":"The ARRC is a group of private-market participants convened by the Federal Reserve to help transition from LIBOR to new reference rates like SOFR. This affects how variable interest rates are set for your loan.","url":"https://dealroom.so/glossary/alternative-reference-rates-committee","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"libor","url":"https://dealroom.so/glossary/libor"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"amendment","term":"Amendment","group":"Doing the deal","definition":"An amendment is a formal change or addition to an existing document, such as a purchase agreement or loan authorization. It's used to modify terms agreed upon earlier without creating an entirely new document.","url":"https://dealroom.so/glossary/amendment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"}]},{"slug":"appraisal-fee","term":"Appraisal fee","group":"Doing the deal","definition":"An appraisal fee is the cost paid to a professional appraiser to determine the fair market value of assets being purchased. This fee is typically part of your total project costs for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/appraisal-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"board-representation","term":"Board representation","group":"People and paperwork","definition":"Board representation refers to having a seat on a company's board of directors, giving you a voice in strategic decisions. This is rare for a small business buyer, but important if an investor is involved.","url":"https://dealroom.so/glossary/board-representation","official_sources":[],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"business-legal-entity-structure","term":"Business legal entity structure","group":"People and paperwork","definition":"This refers to how a business is legally organized, such as a sole proprietorship, partnership, LLC, or corporation. Your chosen structure impacts liability, taxes, and how you acquire and operate the business.","url":"https://dealroom.so/glossary/business-legal-entity-structure","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"collateral-filing","term":"Collateral filing","group":"Doing the deal","definition":"This is the legal process of recording a lender's claim on your assets (collateral) as security for a loan. It ensures the lender has priority if you default.","url":"https://dealroom.so/glossary/collateral-filing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"collateral-recovery","term":"Collateral recovery","group":"Doing the deal","definition":"This is the process where a lender seizes and sells collateral to recoup losses when a borrower defaults on a loan. It's the last resort for the lender.","url":"https://dealroom.so/glossary/collateral-recovery","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"conversion-right","term":"Conversion right","group":"The loan itself","definition":"This is a loan feature allowing you to change the interest rate type, typically from variable to fixed, or vice versa, at specific points during the loan term. It offers flexibility against market changes.","url":"https://dealroom.so/glossary/conversion-right","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"}]},{"slug":"eligibility-opinion","term":"Eligibility opinion","group":"People and paperwork","definition":"This is a formal statement from the lender confirming that your business and the loan purpose meet all SBA program requirements. It's a critical step before loan approval.","url":"https://dealroom.so/glossary/eligibility-opinion","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"environmental-indemnification","term":"Environmental indemnification","group":"Doing the deal","definition":"This is a clause in a purchase agreement where the seller agrees to cover the buyer's costs for any environmental liabilities that arose before the sale. It protects you from past issues.","url":"https://dealroom.so/glossary/environmental-indemnification","official_sources":[],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"fee-structure","term":"Fee structure","group":"Doing the deal","definition":"This refers to all the costs and charges associated with obtaining and maintaining your SBA 7(a) loan. Understanding it helps you budget accurately for the deal.","url":"https://dealroom.so/glossary/fee-structure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"government-guaranty","term":"Government guaranty","group":"The loan itself","definition":"This is the SBA's promise to reimburse a portion of your lender's loss if you default on your 7(a) loan. It reduces the lender's risk, making it easier for them to lend to small businesses.","url":"https://dealroom.so/glossary/government-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty-purchase-claim","url":"https://dealroom.so/glossary/guaranty-purchase-claim"}]},{"slug":"guaranty-purchase-claim","term":"Guaranty purchase claim","group":"The loan itself","definition":"This is when a lender asks the SBA to honor its government guaranty after a borrower defaults and the lender has exhausted all recovery efforts. It's the official request for the SBA to pay out.","url":"https://dealroom.so/glossary/guaranty-purchase-claim","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"government-guaranty","url":"https://dealroom.so/glossary/government-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"junior-lienholder","term":"Junior lienholder","group":"People and paperwork","definition":"This is a creditor whose claim on a business asset is subordinate to another creditor's claim. They get paid after the senior lienholder if the asset is sold.","url":"https://dealroom.so/glossary/junior-lienholder","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"lender-s-credit-authority","term":"Lender's Credit Authority","aka":"LCA","group":"People and paperwork","definition":"This refers to the specific dollar amount a lender is authorized to approve for SBA loans under their delegated authority without prior SBA review. It speeds up the approval process.","url":"https://dealroom.so/glossary/lender-s-credit-authority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"}]},{"slug":"leverage-ratio","term":"Leverage ratio","group":"Reading the business","definition":"This financial metric measures how much a business relies on debt to finance its assets. A high ratio indicates higher financial risk.","url":"https://dealroom.so/glossary/leverage-ratio","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"management-agreement","term":"Management agreement","group":"People and paperwork","definition":"This is a contract outlining the terms and conditions under which a third party manages a business or property. It defines roles, responsibilities, and compensation.","url":"https://dealroom.so/glossary/management-agreement","official_sources":[],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"}]},{"slug":"principal-deferment","term":"Principal deferment","group":"The loan itself","definition":"This is a period during a loan's term where you only pay interest, postponing principal payments. It can provide temporary cash flow relief.","url":"https://dealroom.so/glossary/principal-deferment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"recoverability","term":"Recoverability","group":"Reading the business","definition":"This refers to the likelihood that a lender can recoup its investment from a defaulted loan, usually by seizing and selling collateral. It's a key factor in underwriting.","url":"https://dealroom.so/glossary/recoverability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-recovery","url":"https://dealroom.so/glossary/collateral-recovery"}]},{"slug":"remediation-plan","term":"Remediation plan","group":"Doing the deal","definition":"A formal strategy to fix a problem, often environmental or operational, identified during due diligence. It outlines steps, timelines, and responsibilities to bring something into compliance or an acceptable condition.","url":"https://dealroom.so/glossary/remediation-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"s-corporation","term":"S-Corporation","aka":"S-Corp","group":"People and paperwork","definition":"A business entity that passes corporate income, losses, deductions, and credits through to its shareholders for federal tax purposes. This structure helps avoid double taxation on corporate income.","url":"https://dealroom.so/glossary/s-corporation","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"secured-position","term":"Secured position","group":"The loan itself","definition":"Refers to the lender's right to take specific assets (collateral) if you default on your loan. This minimizes the lender's risk and is fundamental to SBA 7(a) loans.","url":"https://dealroom.so/glossary/secured-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"seller-debt","term":"Seller debt","aka":"Seller note","group":"Your money in the deal","definition":"A portion of the purchase price that the seller agrees to finance, where the buyer repays the seller over time. This reduces the cash you need upfront for the acquisition.","url":"https://dealroom.so/glossary/seller-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-standby-agreement","url":"https://dealroom.so/glossary/seller-standby-agreement"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"seller-standby-agreement","term":"Seller standby agreement","aka":"Standby agreement","group":"Your money in the deal","definition":"A formal agreement where the seller agrees to defer repayment of any seller debt until the SBA loan is fully satisfied. This ensures the SBA lender is prioritized for repayment.","url":"https://dealroom.so/glossary/seller-standby-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-debt","url":"https://dealroom.so/glossary/seller-debt"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"soil-remediation","term":"Soil remediation","group":"Doing the deal","definition":"The process of removing pollutants or contaminants from soil to prevent harm to human health or the environment. It's often required when buying property with a history of industrial use.","url":"https://dealroom.so/glossary/soil-remediation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"remediation-plan","url":"https://dealroom.so/glossary/remediation-plan"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"}]},{"slug":"state-tax-lien","term":"State tax lien","group":"Doing the deal","definition":"A legal claim placed on your property or assets by a state government for unpaid taxes, such as sales tax or state income tax. It grants the state a security interest.","url":"https://dealroom.so/glossary/state-tax-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"will-trust","term":"Will/trust","group":"People and paperwork","definition":"Legal documents that dictate how a person's assets will be managed and distributed after their death. A will takes effect upon death, while a trust can manage assets during life and after.","url":"https://dealroom.so/glossary/will-trust","official_sources":[],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"}]},{"slug":"work-authorization","term":"Work authorization","group":"People and paperwork","definition":"Official permission for a non-citizen to work legally in the United States. It's typically granted by USCIS and documented with specific forms.","url":"https://dealroom.so/glossary/work-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"bona-fide","term":"Bona fide","group":"People and paperwork","definition":"Latin for \"in good faith,\" meaning genuine, sincere, and without intention to deceive. It implies honesty and integrity in actions or agreements.","url":"https://dealroom.so/glossary/bona-fide","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"licensor","term":"Licensor","group":"People and paperwork","definition":"An entity that grants permission to another party (the licensee) to use its intellectual property, such as trademarks, patents, or copyrighted material, under specific terms and conditions.","url":"https://dealroom.so/glossary/licensor","official_sources":[],"related":[{"slug":"licensee","url":"https://dealroom.so/glossary/licensee"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"licensee","term":"Licensee","group":"People and paperwork","definition":"The party that receives permission from a licensor to use intellectual property or a specific right, typically in exchange for a fee or royalty.","url":"https://dealroom.so/glossary/licensee","official_sources":[],"related":[{"slug":"licensor","url":"https://dealroom.so/glossary/licensor"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"management-structure","term":"Management structure","group":"People and paperwork","definition":"The way a business organizes its leadership, roles, and reporting relationships. It defines who makes decisions and how responsibilities are distributed within the company.","url":"https://dealroom.so/glossary/management-structure","official_sources":[],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"management-buyout","url":"https://dealroom.so/glossary/management-buyout"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"management-buyout","term":"Management buyout","aka":"MBO","group":"Doing the deal","definition":"A transaction where the existing management team of a company acquires a controlling stake in the business from its current owners.","url":"https://dealroom.so/glossary/management-buyout","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"deferred-compensation","term":"Deferred compensation","group":"Reading the business","definition":"Money earned by an employee or owner but paid out later, often to reduce current tax liability. As a buyer, you need to understand if these liabilities will transfer with the business.","url":"https://dealroom.so/glossary/deferred-compensation","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"hard-assets","term":"Hard assets","group":"Reading the business","definition":"Physical, tangible items like equipment, real estate, and inventory. These are important because they often serve as collateral for your SBA loan and contribute to the business's value.","url":"https://dealroom.so/glossary/hard-assets","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"debtor","term":"Debtor","group":"People and paperwork","definition":"The individual or entity that owes money. In a business acquisition, the business itself might be a debtor to a seller note, or you, as the buyer, will be the debtor to the SBA loan.","url":"https://dealroom.so/glossary/debtor","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"perfect-a-security-interest","term":"Perfect a security interest","group":"Doing the deal","definition":"The legal process a lender uses to establish its claim over collateral, making it enforceable against other creditors. This ensures the lender can seize the asset if you default.","url":"https://dealroom.so/glossary/perfect-a-security-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"unperfected","term":"Unperfected","group":"Doing the deal","definition":"Describes a security interest that hasn't been legally established, leaving the creditor's claim vulnerable to other, properly perfected claims. This is a risk for any lender.","url":"https://dealroom.so/glossary/unperfected","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"perfect-a-security-interest","url":"https://dealroom.so/glossary/perfect-a-security-interest"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"}]},{"slug":"tiered-fee-schedule","term":"Tiered fee schedule","group":"Doing the deal","definition":"A fee structure where the percentage or amount charged changes based on the loan amount or other specified thresholds. This impacts your total upfront costs.","url":"https://dealroom.so/glossary/tiered-fee-schedule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"guaranteed-amount","term":"Guaranteed amount","group":"The loan itself","definition":"The portion of an SBA loan that the SBA promises to repay the lender if you default. This guarantee reduces risk for lenders, making loans more accessible for small businesses.","url":"https://dealroom.so/glossary/guaranteed-amount","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"financial-institution","url":"https://dealroom.so/glossary/financial-institution"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"eligibility-requirement","term":"Eligibility requirement","group":"The loan itself","definition":"Specific criteria set by the SBA that both the borrower and the business must meet to qualify for a 7(a) loan. Failing any requirement means no loan.","url":"https://dealroom.so/glossary/eligibility-requirement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"small-business-size-standard","url":"https://dealroom.so/glossary/small-business-size-standard"},{"slug":"for-profit-business","url":"https://dealroom.so/glossary/for-profit-business"},{"slug":"ineligible-activity","url":"https://dealroom.so/glossary/ineligible-activity"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"financial-institution","term":"Financial institution","group":"People and paperwork","definition":"A bank, credit union, or other lender authorized to make SBA 7(a) loans. This is who you'll apply to for your acquisition financing.","url":"https://dealroom.so/glossary/financial-institution","official_sources":[],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"unlimited-personal-guarantee","term":"Unlimited personal guarantee","group":"Your money in the deal","definition":"A legal promise by you, the borrower, to personally repay the entire loan amount if the business defaults. This puts your personal assets at risk.","url":"https://dealroom.so/glossary/unlimited-personal-guarantee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"secondary-source-of-repayment","term":"Secondary source of repayment","group":"The loan itself","definition":"Beyond the business's cash flow, this is another way the loan can be repaid, typically through collateral or a personal guarantee. It's the lender's backup plan.","url":"https://dealroom.so/glossary/secondary-source-of-repayment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"for-profit-business","term":"For-profit business","group":"Reading the business","definition":"A business whose primary goal is to generate profit for its owners. SBA 7(a) loans are exclusively available for these types of entities.","url":"https://dealroom.so/glossary/for-profit-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-requirement","url":"https://dealroom.so/glossary/eligibility-requirement"},{"slug":"ineligible-activity","url":"https://dealroom.so/glossary/ineligible-activity"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"small-business-size-standard","term":"Small business size standard","group":"The loan itself","definition":"Criteria set by the SBA to define what constitutes a \"small business,\" typically based on revenue or number of employees. Your target business must meet this to qualify for an SBA loan.","url":"https://dealroom.so/glossary/small-business-size-standard","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-requirement","url":"https://dealroom.so/glossary/eligibility-requirement"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"ineligible-activity","term":"Ineligible activity","group":"The loan itself","definition":"Certain business types or activities that the SBA will not fund, such as passive investments or businesses engaged in illegal activities. If your target business has an ineligible activity, it won't qualify.","url":"https://dealroom.so/glossary/ineligible-activity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-requirement","url":"https://dealroom.so/glossary/eligibility-requirement"},{"slug":"for-profit-business","url":"https://dealroom.so/glossary/for-profit-business"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"size-standard-compliance","term":"Size standard compliance","group":"The loan itself","definition":"This refers to whether the target business meets the SBA's definition of a \"small business\" based on its industry, revenue, or employee count. It's a fundamental eligibility requirement for an SBA loan.","url":"https://dealroom.so/glossary/size-standard-compliance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"ineligible-business-list","url":"https://dealroom.so/glossary/ineligible-business-list"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"business-credit-history","term":"Business credit history","group":"Reading the business","definition":"This is a record of how a business has managed its past debts and financial obligations. A strong history indicates reliability, which is crucial for lenders assessing risk.","url":"https://dealroom.so/glossary/business-credit-history","official_sources":[],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"financial-obligation","url":"https://dealroom.so/glossary/financial-obligation"},{"slug":"debt","url":"https://dealroom.so/glossary/debt"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"financial-obligation","term":"Financial obligation","group":"Reading the business","definition":"This is any debt, liability, or contractual commitment a business owes to another party. Understanding all obligations is critical for assessing the business's true financial health.","url":"https://dealroom.so/glossary/financial-obligation","official_sources":[],"related":[{"slug":"debt","url":"https://dealroom.so/glossary/debt"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"maturity-term","term":"Maturity term","aka":"Term / maturity","group":"The loan itself","definition":"This is the total length of time, in years, over which you're required to repay a loan. A longer maturity term generally means lower monthly payments.","url":"https://dealroom.so/glossary/maturity-term","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"average-annual-revenue","term":"Average annual revenue","group":"Reading the business","definition":"This is the total sales generated by a business over a typical year, usually averaged over several years to smooth out fluctuations. It's a key metric for evaluating business size and performance.","url":"https://dealroom.so/glossary/average-annual-revenue","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"environmental-review-fee","term":"Environmental review fee","group":"Doing the deal","definition":"This is a charge for an assessment of potential environmental contamination on real estate associated with the business. It's a standard cost if the deal includes property or specific industries.","url":"https://dealroom.so/glossary/environmental-review-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"new-venture","term":"New venture","group":"Reading the business","definition":"This refers to a newly established business with no operating history. SBA loans for new ventures are generally harder to get due to higher perceived risk.","url":"https://dealroom.so/glossary/new-venture","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"start-up","url":"https://dealroom.so/glossary/start-up"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"debt","term":"Debt","group":"Reading the business","definition":"Debt is money owed or due to another party, typically repaid with interest over time. It's a major component of a business's liabilities and impacts its financial health.","url":"https://dealroom.so/glossary/debt","official_sources":[],"related":[{"slug":"financial-obligation","url":"https://dealroom.so/glossary/financial-obligation"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"}]},{"slug":"ineligible-business-list","term":"Ineligible business list","group":"The loan itself","definition":"This is a list of business types that the SBA will not provide loans to, regardless of their financial strength. It's an absolute disqualifier for 7(a) financing.","url":"https://dealroom.so/glossary/ineligible-business-list","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"multi-level-marketing-company","url":"https://dealroom.so/glossary/multi-level-marketing-company"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"federal-tax-obligation","term":"Federal tax obligation","group":"Reading the business","definition":"This is the amount of tax a business owes to the federal government. Unpaid or mismanaged tax obligations can signal financial distress or compliance issues.","url":"https://dealroom.so/glossary/federal-tax-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"federal-tax-lien","url":"https://dealroom.so/glossary/federal-tax-lien"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"financial-obligation","url":"https://dealroom.so/glossary/financial-obligation"}]},{"slug":"federal-tax-lien","term":"Federal tax lien","group":"Doing the deal","definition":"This is a legal claim by the IRS against a business's assets due to unpaid federal taxes. It takes priority over most other debts and can block an acquisition.","url":"https://dealroom.so/glossary/federal-tax-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"federal-tax-obligation","url":"https://dealroom.so/glossary/federal-tax-obligation"}]},{"slug":"credit-not-available-elsewhere-rule","term":"Credit Not Available Elsewhere rule","aka":"Credit elsewhere test","group":"The loan itself","definition":"This SBA rule means you must demonstrate that you cannot get a conventional loan on reasonable terms without an SBA guarantee. It ensures SBA loans only go to those who truly need them.","url":"https://dealroom.so/glossary/credit-not-available-elsewhere-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-of-last-resort","url":"https://dealroom.so/glossary/lender-of-last-resort"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"lender-of-last-resort","term":"Lender of last resort","group":"The loan itself","definition":"This describes the SBA's role in providing financing when conventional lenders are unwilling or unable to do so on reasonable terms. It's not a sign of poor credit, but rather market necessity.","url":"https://dealroom.so/glossary/lender-of-last-resort","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-not-available-elsewhere-rule","url":"https://dealroom.so/glossary/credit-not-available-elsewhere-rule"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"internal-credit-policy","term":"Internal credit policy","group":"People and paperwork","definition":"This is a bank's own set of rules and guidelines for assessing loan applications, separate from SBA requirements. Lenders must meet both their own and the SBA's standards.","url":"https://dealroom.so/glossary/internal-credit-policy","official_sources":[],"related":[{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"undischarged-bankruptcy","term":"Undischarged Bankruptcy","group":"Reading the business","definition":"A bankruptcy case still open and not yet finalized by the court. For buyers, an undischarged bankruptcy for the seller or key principals is a significant red flag that can prevent SBA loan approval.","url":"https://dealroom.so/glossary/undischarged-bankruptcy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"outstanding-liability","term":"Outstanding Liability","group":"Reading the business","definition":"An unsettled financial obligation owed by the business to another party. Unaccounted or hidden liabilities can significantly devalue a business and affect its cash flow, impacting your ability to repay an SBA loan.","url":"https://dealroom.so/glossary/outstanding-liability","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"cross-collateralization","term":"Cross-Collateralization","group":"The loan itself","definition":"When assets from multiple loans or businesses are used as collateral for a single loan. The SBA generally restricts cross-collateralization to prevent assets from one business being used to secure another unrelated SBA loan.","url":"https://dealroom.so/glossary/cross-collateralization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"eligible-use-of-funds","term":"Eligible Use of Funds","group":"The loan itself","definition":"The specific purposes for which an SBA 7(a) loan can be used, as defined by SBA rules. Funds must directly support the business acquisition or its operations; using them for personal expenses is strictly prohibited.","url":"https://dealroom.so/glossary/eligible-use-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"tangible-fixed-asset","term":"Tangible Fixed Asset","group":"Reading the business","definition":"Physical assets owned by the business that have a useful life of more than one year, such as equipment, vehicles, or real estate. These assets are important because they contribute to the business's operational capacity and can serve as collateral for your SBA loan.","url":"https://dealroom.so/glossary/tangible-fixed-asset","official_sources":[],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"approved-sba-lender","term":"Approved SBA Lender","group":"People and paperwork","definition":"A financial institution authorized by the SBA to originate and service SBA-guaranteed loans. Working with an experienced approved lender is crucial because they understand the complex SBA rules and can guide your loan application process.","url":"https://dealroom.so/glossary/approved-sba-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"commingling-of-funds","term":"Commingling of Funds","group":"Reading the business","definition":"Mixing personal funds with business funds, or funds from separate businesses, in a single account. This practice creates accounting headaches, obscures true business performance, and is a red flag for SBA lenders.","url":"https://dealroom.so/glossary/commingling-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"liquidate-collateral","term":"Liquidate Collateral","group":"Doing the deal","definition":"The process by which a lender sells assets pledged as collateral to recover funds when a borrower defaults on a loan. This is a last resort for the lender and signals a severe failure in loan repayment.","url":"https://dealroom.so/glossary/liquidate-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"guaranty-claim-denial","term":"Guaranty Claim Denial","group":"The loan itself","definition":"When the SBA refuses to honor its guaranty to a lender for a defaulted loan, usually due to lender errors or non-compliance with SBA rules. This is a risk for the lender, but it highlights the importance of working with a compliant lender.","url":"https://dealroom.so/glossary/guaranty-claim-denial","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"borrower-equity","term":"Borrower Equity","group":"Your money in the deal","definition":"The portion of the total project costs that the buyer contributes from their own funds, not financed by the SBA loan or seller. It demonstrates your commitment and reduces the lender's risk, typically requiring 10-20% for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/borrower-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"ineligible-business-category","term":"Ineligible Business Category","group":"The loan itself","definition":"Specific types of businesses that the SBA will not provide loans for, regardless of their financial health. These include businesses involved in gambling, passive investments, or those with a history of illegal activities.","url":"https://dealroom.so/glossary/ineligible-business-category","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"ceo","term":"CEO","group":"People and paperwork","definition":"The highest-ranking executive in a company, responsible for overall strategic direction and operations. As the new CEO, you will be the primary guarantor and key person for the SBA loan, making your experience and character critical.","url":"https://dealroom.so/glossary/ceo","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"majority-owner","url":"https://dealroom.so/glossary/majority-owner"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"majority-owner","term":"Majority Owner","group":"People and paperwork","definition":"An individual or entity that owns more than 50% of the voting equity in a business. As a majority owner of the acquired business, you will be required to personally guarantee the SBA 7(a) loan.","url":"https://dealroom.so/glossary/majority-owner","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"related-party-lease","term":"Related-Party Lease","group":"Reading the business","definition":"A lease agreement where the business leases property from its owner or an affiliated entity. These leases require scrutiny because terms might not be \"arm's length,\" potentially inflating expenses or masking true profitability.","url":"https://dealroom.so/glossary/related-party-lease","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"owner-occupancy-percentage","term":"Owner-occupancy percentage","group":"The loan itself","definition":"This is the percentage of a property's total square footage that the buyer's business will occupy. The SBA requires the operating business to occupy a significant portion of any real estate being purchased with a 7(a) loan.","url":"https://dealroom.so/glossary/owner-occupancy-percentage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"use-of-loan-proceeds","url":"https://dealroom.so/glossary/use-of-loan-proceeds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"aggregate-exposure","term":"Aggregate exposure","group":"The loan itself","definition":"This is the total dollar amount the SBA has guaranteed across all loans to a single borrower or affiliated group. The SBA has a maximum cap on this amount to limit risk.","url":"https://dealroom.so/glossary/aggregate-exposure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"irrevocable-gift","term":"Irrevocable gift","group":"Your money in the deal","definition":"This is a cash gift from a third party (like a family member) that is permanently given to the borrower for their equity injection. The giver cannot expect repayment or any benefit.","url":"https://dealroom.so/glossary/irrevocable-gift","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"transfer-title","term":"Transfer title","group":"Doing the deal","definition":"This is the legal process of changing ownership of an asset, like real estate or a vehicle, from the seller to the buyer. It's a critical step in closing an acquisition.","url":"https://dealroom.so/glossary/transfer-title","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"non-cash-equity","term":"Non-cash equity","group":"Your money in the deal","definition":"This is a portion of your down payment that isn't actual cash, such as a seller note on full standby or a buyer's existing business assets contributed to the new entity.","url":"https://dealroom.so/glossary/non-cash-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"borrower-default","term":"Borrower default","group":"The loan itself","definition":"This occurs when a borrower fails to meet the terms of their loan agreement, most commonly by missing payments. It can trigger serious consequences, including foreclosure or liquidation.","url":"https://dealroom.so/glossary/borrower-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"sba-lender","term":"SBA lender","group":"People and paperwork","definition":"This is a bank or financial institution authorized by the Small Business Administration to make loans under the 7(a) program. They underwrite, close, and service the loan, with the SBA providing a partial guarantee.","url":"https://dealroom.so/glossary/sba-lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"use-of-loan-proceeds","term":"Use of Loan Proceeds","group":"The loan itself","definition":"This specifies exactly what the SBA loan funds can be spent on. The SBA has strict rules for eligible uses to ensure the money supports small business growth.","url":"https://dealroom.so/glossary/use-of-loan-proceeds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"weighted-average-useful-life","term":"Weighted Average Useful Life","group":"Reading the business","definition":"This is a calculation used to determine the maximum loan term for an SBA loan, based on the average useful life of the assets being financed, weighted by their cost.","url":"https://dealroom.so/glossary/weighted-average-useful-life","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"blended-maturity","term":"Blended Maturity","group":"The loan itself","definition":"This refers to a single loan term applied to an SBA loan that finances multiple types of assets with different useful lives. 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It's the starting point for calculating interest and amortization.","url":"https://dealroom.so/glossary/original-principal-balance","official_sources":[],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"fair-market-valuation","term":"Fair Market Valuation","group":"Reading the business","definition":"This is an independent estimate of a business's or asset's value, representing the price at which it would change hands between a willing buyer and seller.","url":"https://dealroom.so/glossary/fair-market-valuation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"}]},{"slug":"character-check","term":"Character Check","group":"People and paperwork","definition":"This is the SBA's evaluation of the borrower's background and honesty, including credit history and any criminal record, to assess their trustworthiness.","url":"https://dealroom.so/glossary/character-check","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"legal-judgment","term":"Legal Judgment","group":"People and paperwork","definition":"A court order requiring you to pay money, which can significantly impact your credit and ability to get an SBA loan. 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For an acquisition, it refers to the funds required to get the acquired business running effectively post-closing.","url":"https://dealroom.so/glossary/startup-capital","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"direct-loan","term":"Direct Loan","group":"The loan itself","definition":"A loan made directly by the SBA, rather than through a bank or credit union. These are rare for 7(a) acquisitions and not the typical financing route.","url":"https://dealroom.so/glossary/direct-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"}]},{"slug":"debt-consolidation","term":"Debt Consolidation","group":"The loan itself","definition":"Combining multiple existing business debts into a single new loan, often to simplify payments or secure a lower interest rate.","url":"https://dealroom.so/glossary/debt-consolidation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"moral-hazard","term":"Moral Hazard","group":"Reading the business","definition":"A situation where one party takes on more risk because another party bears the cost of that risk. It can appear when a seller's incentives change post-sale.","url":"https://dealroom.so/glossary/moral-hazard","official_sources":[],"related":[{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"negative-net-worth","term":"Negative Net Worth","group":"Reading the business","definition":"When a business's total liabilities exceed its total assets, indicating financial distress. This is a major red flag for lenders and signals potential insolvency.","url":"https://dealroom.so/glossary/negative-net-worth","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"turnaround-strategy","term":"Turnaround Strategy","group":"Reading the business","definition":"A plan to revitalize a struggling business and improve its financial performance. This is crucial if you're buying a fixer-upper with an SBA loan.","url":"https://dealroom.so/glossary/turnaround-strategy","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"pre-leasing","term":"Pre-leasing","group":"Reading the business","definition":"Securing lease agreements for a property or space before it's fully developed or ready for occupancy. This is more common in real estate development.","url":"https://dealroom.so/glossary/pre-leasing","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"sba-guaranteed-debenture","term":"SBA-Guaranteed Debenture","group":"The loan itself","definition":"A type of bond or debt instrument issued by an SBA-approved lender, backed by the SBA's guarantee, and sold in the secondary market.","url":"https://dealroom.so/glossary/sba-guaranteed-debenture","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan 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Non-compliance can lead to severe penalties.","url":"https://dealroom.so/glossary/regulatory-compliance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"equity-owner","term":"Equity Owner","group":"People and paperwork","definition":"An individual or entity that owns a portion of a business, typically through shares or membership units. For an SBA loan, equity owners are usually required to personally guarantee the loan.","url":"https://dealroom.so/glossary/equity-owner","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"managerial-control","term":"Managerial Control","group":"People and paperwork","definition":"The power to direct the day-to-day operations and strategic decisions of a business. The SBA requires that the borrower, usually the buyer, has managerial control.","url":"https://dealroom.so/glossary/managerial-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"retained-control","url":"https://dealroom.so/glossary/retained-control"},{"slug":"executive-authority","url":"https://dealroom.so/glossary/executive-authority"},{"slug":"management-authority","url":"https://dealroom.so/glossary/management-authority"},{"slug":"seller-consulting-agreement","url":"https://dealroom.so/glossary/seller-consulting-agreement"}]},{"slug":"sba-guaranty-denial","term":"SBA Guaranty Denial","group":"The loan itself","definition":"When the SBA refuses to honor its guaranty to the lender, typically due to a lender's failure to follow procedures or misrepresentation. This leaves the lender fully exposed to the loan's risk.","url":"https://dealroom.so/glossary/sba-guaranty-denial","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"aggregate-principal-amount","term":"Aggregate Principal Amount","group":"The loan itself","definition":"The total sum of money borrowed across all SBA loans. The SBA has limits on the maximum aggregate principal amount an individual or affiliated group can have outstanding.","url":"https://dealroom.so/glossary/aggregate-principal-amount","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"aggregate-cap","url":"https://dealroom.so/glossary/aggregate-cap"},{"slug":"sba-loan-exposure","url":"https://dealroom.so/glossary/sba-loan-exposure"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"aggregate-cap","term":"Aggregate Cap","group":"The loan itself","definition":"The maximum total amount of SBA loan funds any single borrower or affiliated group can receive across all 7(a) loans. It's a key limit to understand for serial entrepreneurs.","url":"https://dealroom.so/glossary/aggregate-cap","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"aggregate-principal-amount","url":"https://dealroom.so/glossary/aggregate-principal-amount"},{"slug":"sba-loan-exposure","url":"https://dealroom.so/glossary/sba-loan-exposure"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"sba-loan-exposure","term":"SBA Loan Exposure","group":"The loan itself","definition":"The total amount of outstanding SBA-guaranteed debt associated with a borrower or affiliated group. It's how the SBA tracks your utilization against the aggregate cap.","url":"https://dealroom.so/glossary/sba-loan-exposure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"aggregate-principal-amount","url":"https://dealroom.so/glossary/aggregate-principal-amount"},{"slug":"aggregate-cap","url":"https://dealroom.so/glossary/aggregate-cap"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"pyramid-sales-scheme","term":"Pyramid Sales Scheme","group":"Reading the business","definition":"A business model where participants profit primarily from recruiting new members, rather than from selling actual products or services. These are generally illegal and ineligible for SBA loans.","url":"https://dealroom.so/glossary/pyramid-sales-scheme","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"multi-level-marketing-company","url":"https://dealroom.so/glossary/multi-level-marketing-company"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"undue-influence","term":"Undue Influence","group":"People and paperwork","definition":"When one party improperly pressures or manipulates another into making a decision against their best interest. This can invalidate agreements and is a red flag in any business transaction.","url":"https://dealroom.so/glossary/undue-influence","official_sources":[],"related":[{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"chief-operating-officer","term":"Chief Operating Officer","aka":"COO","group":"People and paperwork","definition":"A senior executive responsible for managing the daily operations of a company. They ensure the business runs efficiently and effectively.","url":"https://dealroom.so/glossary/chief-operating-officer","official_sources":[],"related":[{"slug":"managerial-control","url":"https://dealroom.so/glossary/managerial-control"},{"slug":"executive-authority","url":"https://dealroom.so/glossary/executive-authority"},{"slug":"management-authority","url":"https://dealroom.so/glossary/management-authority"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"u-s-national","term":"U.S. National","group":"People and paperwork","definition":"A person who owes allegiance to the U.S. and is entitled to its protection, but is not necessarily a U.S. citizen. The SBA has specific eligibility rules for non-citizens.","url":"https://dealroom.so/glossary/u-s-national","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"equity-owner","url":"https://dealroom.so/glossary/equity-owner"}]},{"slug":"seller-consulting-agreement","term":"Seller Consulting Agreement","group":"Doing the deal","definition":"An agreement where the seller remains with the business for a period after the sale, typically to assist with the transition, provide training, or consult. This is common in small business acquisitions.","url":"https://dealroom.so/glossary/seller-consulting-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"retained-control","url":"https://dealroom.so/glossary/retained-control"},{"slug":"managerial-control","url":"https://dealroom.so/glossary/managerial-control"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"retained-control","term":"Retained Control","group":"People and paperwork","definition":"When a seller or other party maintains significant influence or decision-making power over a business after its sale. The SBA strictly limits this for 7(a) loan borrowers.","url":"https://dealroom.so/glossary/retained-control","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"managerial-control","url":"https://dealroom.so/glossary/managerial-control"},{"slug":"executive-authority","url":"https://dealroom.so/glossary/executive-authority"},{"slug":"management-authority","url":"https://dealroom.so/glossary/management-authority"},{"slug":"seller-consulting-agreement","url":"https://dealroom.so/glossary/seller-consulting-agreement"}]},{"slug":"management-authority","term":"Management Authority","group":"People and paperwork","definition":"The power to make decisions regarding the operation and strategic direction of a business. The SBA requires that the buyer obtains full management authority.","url":"https://dealroom.so/glossary/management-authority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"managerial-control","url":"https://dealroom.so/glossary/managerial-control"},{"slug":"executive-authority","url":"https://dealroom.so/glossary/executive-authority"},{"slug":"retained-control","url":"https://dealroom.so/glossary/retained-control"},{"slug":"seller-consulting-agreement","url":"https://dealroom.so/glossary/seller-consulting-agreement"}]},{"slug":"executive-authority","term":"Executive Authority","group":"People and paperwork","definition":"The ultimate power to lead and direct a company's overall operations and strategic vision. This authority typically rests with the highest-level officers or owners.","url":"https://dealroom.so/glossary/executive-authority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"managerial-control","url":"https://dealroom.so/glossary/managerial-control"},{"slug":"management-authority","url":"https://dealroom.so/glossary/management-authority"},{"slug":"retained-control","url":"https://dealroom.so/glossary/retained-control"},{"slug":"chief-operating-officer","url":"https://dealroom.so/glossary/chief-operating-officer"}]},{"slug":"existing-line-of-credit","term":"Existing Line of Credit","group":"The loan itself","definition":"A revolving credit facility already in place for the business. As a buyer, you need to understand if this will be paid off at closing or if you're taking it over, impacting your working capital.","url":"https://dealroom.so/glossary/existing-line-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"validity-period","term":"Validity Period","group":"People and paperwork","definition":"The timeframe during which an offer, like a loan commitment or a seller's proposal, remains active and legally binding. Missing this deadline means the offer might expire, forcing renegotiation or cancellation.","url":"https://dealroom.so/glossary/validity-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"extension","url":"https://dealroom.so/glossary/extension"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"extension","term":"Extension","group":"Doing the deal","definition":"An agreement to prolong a deadline, whether for a loan commitment, due diligence, or other deal milestones. You'll need this if you can't meet original timelines, but it may come with conditions or costs.","url":"https://dealroom.so/glossary/extension","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"validity-period","url":"https://dealroom.so/glossary/validity-period"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"franchisor-undue-control","term":"Franchisor Undue Control","group":"Reading the business","definition":"This occurs when a franchisor has excessive control over the operations of the franchisee, making the franchisee appear more like an employee. The SBA specifically evaluates this to ensure the borrower truly owns and controls the business receiving the loan.","url":"https://dealroom.so/glossary/franchisor-undue-control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"insurance-carrier","term":"Insurance Carrier","group":"People and paperwork","definition":"The company providing insurance coverage for the business and its assets. The SBA requires specific types and levels of insurance to protect its collateral.","url":"https://dealroom.so/glossary/insurance-carrier","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"disclosure-obligation","term":"Disclosure Obligation","group":"People and paperwork","definition":"The legal duty to reveal all relevant facts and information pertinent to a transaction. Failure to disclose can lead to severe consequences for the seller, lender, and even the buyer.","url":"https://dealroom.so/glossary/disclosure-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"material-omission","url":"https://dealroom.so/glossary/material-omission"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"material-omission","term":"Material Omission","group":"People and paperwork","definition":"The failure to disclose a significant fact that, if known, would have influenced a party's decision or the terms of a deal. This is serious and can invalidate agreements or lead to legal action.","url":"https://dealroom.so/glossary/material-omission","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"disclosure-obligation","url":"https://dealroom.so/glossary/disclosure-obligation"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"programmatic-review","term":"Programmatic Review","group":"Doing the deal","definition":"An internal SBA process where a lender's loan portfolio and practices are periodically audited to ensure compliance with SBA rules. This impacts lenders, but ultimately affects how rigorously your loan is underwritten.","url":"https://dealroom.so/glossary/programmatic-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"release-collateral","term":"Release Collateral","group":"Doing the deal","definition":"The act of removing a lien or security interest from an asset that was previously pledged as collateral. This typically happens when a loan is paid off or replacement collateral is provided.","url":"https://dealroom.so/glossary/release-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"replacement-collateral","url":"https://dealroom.so/glossary/replacement-collateral"}]},{"slug":"replacement-collateral","term":"Replacement Collateral","group":"Doing the deal","definition":"New assets pledged to secure a loan when existing collateral is sold or no longer available. This ensures the lender's security interest remains intact.","url":"https://dealroom.so/glossary/replacement-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"release-collateral","url":"https://dealroom.so/glossary/release-collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"initial-liquidation-plan","term":"Initial Liquidation Plan","group":"Doing the deal","definition":"A preliminary strategy developed by the lender to recover funds if a loan defaults, outlining how collateral would be seized and sold. While you aim for success, this plan is always in the background.","url":"https://dealroom.so/glossary/initial-liquidation-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"debt-collection","url":"https://dealroom.so/glossary/debt-collection"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"estimated-liquidation-cost","term":"Estimated Liquidation Cost","group":"Doing the deal","definition":"The projected expenses a lender incurs when liquidating collateral to recover a defaulted loan. These costs reduce the net recovery, so lenders factor them into their risk assessment.","url":"https://dealroom.so/glossary/estimated-liquidation-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"debt-collection","url":"https://dealroom.so/glossary/debt-collection"},{"slug":"ucc-sale","url":"https://dealroom.so/glossary/ucc-sale"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"debt-collection","term":"Debt Collection","group":"Doing the deal","definition":"The process a lender undertakes to recover money owed on a defaulted loan. This can involve demanding payment, repossessing collateral, or legal action.","url":"https://dealroom.so/glossary/debt-collection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"}]},{"slug":"ucc-sale","term":"UCC Sale","group":"Doing the deal","definition":"The sale of collateral by a secured lender following a loan default, conducted under the rules of the Uniform Commercial Code. This is how lenders recover funds from business assets.","url":"https://dealroom.so/glossary/ucc-sale","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"uniform-commercial-code","url":"https://dealroom.so/glossary/uniform-commercial-code"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"estimated-liquidation-cost","url":"https://dealroom.so/glossary/estimated-liquidation-cost"}]},{"slug":"material-default","term":"Material Default","group":"The loan itself","definition":"A serious failure to meet loan terms, like missing payments. For a buyer, this means the SBA loan could be called, risking your business and personal assets.","url":"https://dealroom.so/glossary/material-default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"sba-loan-program-requirements","term":"SBA Loan Program Requirements","group":"People and paperwork","definition":"These are the rules set by the SBA that lenders must follow when originating and servicing 7(a) loans. Your deal must comply to get SBA financing.","url":"https://dealroom.so/glossary/sba-loan-program-requirements","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-error","url":"https://dealroom.so/glossary/eligibility-error"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"unauthorized-modification","term":"Unauthorized Modification","group":"Doing the deal","definition":"This refers to changes made to an SBA loan's terms or conditions without the required SBA approval. Such changes can void the SBA guaranty and leave the lender exposed.","url":"https://dealroom.so/glossary/unauthorized-modification","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-program-requirements","url":"https://dealroom.so/glossary/sba-loan-program-requirements"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"eligibility-error","term":"Eligibility Error","group":"The loan itself","definition":"This happens when a borrower or business doesn't meet SBA's specific criteria for a 7(a) loan, often discovered after closing. It can cause the SBA to deny its guaranty.","url":"https://dealroom.so/glossary/eligibility-error","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-program-requirements","url":"https://dealroom.so/glossary/sba-loan-program-requirements"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"request-for-reconsideration","term":"Request for Reconsideration","group":"Doing the deal","definition":"If the SBA denies a loan application or a guaranty purchase, the lender can submit a formal appeal package. This is a second chance to present your case.","url":"https://dealroom.so/glossary/request-for-reconsideration","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"administrative-appeal-process","url":"https://dealroom.so/glossary/administrative-appeal-process"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"},{"slug":"sba-loan-program-requirements","url":"https://dealroom.so/glossary/sba-loan-program-requirements"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"administrative-appeal-process","term":"Administrative Appeal Process","group":"Doing the deal","definition":"This is the formal procedure for challenging an adverse decision made by the SBA, such as a loan denial or a guaranty purchase refusal. It's a structured way to dispute an SBA ruling.","url":"https://dealroom.so/glossary/administrative-appeal-process","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"request-for-reconsideration","url":"https://dealroom.so/glossary/request-for-reconsideration"},{"slug":"sba-loan-program-requirements","url":"https://dealroom.so/glossary/sba-loan-program-requirements"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"internal-credit-scoring-model","term":"Internal Credit Scoring Model","group":"Reading the business","definition":"Many lenders use their own proprietary models to assess a borrower's creditworthiness and the risk of a loan. It's a key factor in their decision-making beyond just your FICO score.","url":"https://dealroom.so/glossary/internal-credit-scoring-model","official_sources":[],"related":[{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"sbss-score","url":"https://dealroom.so/glossary/sbss-score"}]},{"slug":"collateral-assessment","term":"Collateral Assessment","group":"Reading the business","definition":"This is the process of valuing the assets pledged to secure your loan, ensuring there's enough value to cover the debt if you default. It's crucial for lender comfort and SBA requirements.","url":"https://dealroom.so/glossary/collateral-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"trust-or-estate","term":"Trust or Estate","group":"People and paperwork","definition":"These are legal arrangements that can own a business or assets. If a trust or estate is involved as an owner, additional documentation is required to confirm its legal standing and beneficiaries.","url":"https://dealroom.so/glossary/trust-or-estate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"governing-document","url":"https://dealroom.so/glossary/governing-document"},{"slug":"controlling-party","url":"https://dealroom.so/glossary/controlling-party"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"governing-document","term":"Governing Document","group":"People and paperwork","definition":"This is the legal paperwork (e.g., operating agreement, bylaws, trust agreement) that defines how a business or entity is structured and managed. Lenders review it to understand ownership and authority.","url":"https://dealroom.so/glossary/governing-document","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"trust-or-estate","url":"https://dealroom.so/glossary/trust-or-estate"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"controlling-party","term":"Controlling Party","group":"People and paperwork","definition":"This is any individual or entity with significant influence over the business, typically owning 20% or more, or having key management responsibilities. All Controlling Parties must provide personal guarantees.","url":"https://dealroom.so/glossary/controlling-party","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"dual-citizenship","term":"Dual Citizenship","group":"People and paperwork","definition":"This refers to individuals holding citizenship in two countries. 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These errors can delay your loan approval.","url":"https://dealroom.so/glossary/e-tran-error","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"authorized-loan-amount","term":"Authorized Loan Amount","group":"The loan itself","definition":"This is the specific dollar amount approved by the SBA for your 7(a) loan, detailing exactly how much you can borrow. It's stated in the SBA Loan Authorization.","url":"https://dealroom.so/glossary/authorized-loan-amount","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"principal-amount","url":"https://dealroom.so/glossary/principal-amount"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"principal-amount","term":"Principal Amount","group":"The loan itself","definition":"The principal amount is the initial sum of money borrowed, excluding any interest or fees. 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Certain felony convictions can make you ineligible for an SBA loan.","url":"https://dealroom.so/glossary/criminal-history-disclosure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"federal-debt-information","term":"Federal Debt Information","group":"People and paperwork","definition":"This refers to your obligation to disclose any outstanding debt owed to the U.S. government, such as student loans or prior SBA loans. Delinquent federal debt can make you ineligible.","url":"https://dealroom.so/glossary/federal-debt-information","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"mandatory-repurchase-option","term":"Mandatory Repurchase Option","group":"Doing the deal","definition":"This is a clause in some franchise agreements that allows the franchisor to buy back the business from a franchisee under specific conditions, often related to performance or a change of ownership.","url":"https://dealroom.so/glossary/mandatory-repurchase-option","official_sources":[],"related":[{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"brand-standard","term":"Brand Standard","group":"Reading the business","definition":"Brand standards are the specific rules and guidelines a franchisor sets for how a franchisee must operate the business, ensuring consistency across all locations.","url":"https://dealroom.so/glossary/brand-standard","official_sources":[],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"capitalize","url":"https://dealroom.so/glossary/capitalize"}]},{"slug":"sba-mandated-life-insurance","term":"SBA-Mandated Life Insurance","group":"The loan itself","definition":"The SBA requires life insurance on key principals for most 7(a) loans to protect the lender in case of the borrower's death, ensuring the loan can still be repaid.","url":"https://dealroom.so/glossary/sba-mandated-life-insurance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"loan-repayment","term":"Loan Repayment","group":"The loan itself","definition":"Loan repayment is the process of paying back the principal and interest on your SBA loan according to the agreed-upon schedule. Consistent repayment is critical to avoid default.","url":"https://dealroom.so/glossary/loan-repayment","official_sources":[],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"capitalize","term":"Capitalize","group":"Reading the business","definition":"To capitalize means to record an expenditure as an asset on the balance sheet rather than an expense, spreading its cost over its useful life. 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This makes the total debt grow faster.","url":"https://dealroom.so/glossary/compound","official_sources":[],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"secondary-market-sale","term":"Secondary Market Sale","group":"Doing the deal","definition":"When lenders sell the guaranteed portion of SBA loans to investors, it creates liquidity for new lending. As a buyer, this doesn't directly affect your loan terms but shows the health of the SBA loan ecosystem.","url":"https://dealroom.so/glossary/secondary-market-sale","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"collection","term":"Collection","group":"Doing the deal","definition":"This is the process lenders undertake to recover money from you and collateral if your loan defaults. As a buyer, understanding this process helps you assess the risks and potential outcomes if your business struggles.","url":"https://dealroom.so/glossary/collection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"business-entity-structure","term":"Business Entity Structure","group":"People and paperwork","definition":"This refers to how your business is legally organized (e.g., LLC, Corporation). Your choice impacts liability, taxes, and how you'll sign loan documents.","url":"https://dealroom.so/glossary/business-entity-structure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"}]},{"slug":"conversion","term":"Conversion","group":"Doing the deal","definition":"In SBA loan terms, this often refers to converting a term loan feature, like a variable interest rate to a fixed rate. This can impact your monthly payments and financial predictability.","url":"https://dealroom.so/glossary/conversion","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"ultimate-obligor","term":"Ultimate Obligor","group":"People and paperwork","definition":"This is the legal entity or individual ultimately responsible for repaying the SBA loan. As the buyer, you are typically the ultimate obligor, either directly or through your acquisition entity.","url":"https://dealroom.so/glossary/ultimate-obligor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"assumption-agreement","term":"Assumption Agreement","group":"Doing the deal","definition":"This is a legal document where a new party agrees to take on the financial obligations of an existing loan. In an acquisition, you might assume seller debt, though SBA 7(a) loans are generally not assumable.","url":"https://dealroom.so/glossary/assumption-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"commercially-reasonable-disposition","term":"Commercially Reasonable Disposition","group":"Doing the deal","definition":"This refers to the legal requirement for a lender to sell collateral in a way that maximizes recovery while being fair. As a buyer, this protects you if your business fails and collateral must be sold.","url":"https://dealroom.so/glossary/commercially-reasonable-disposition","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collection","url":"https://dealroom.so/glossary/collection"}]},{"slug":"asset-value","term":"Asset Value","group":"Reading the business","definition":"The monetary worth of a business's tangible assets like equipment, inventory, and real estate. Lenders use this to assess collateral for your loan.","url":"https://dealroom.so/glossary/asset-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"liquidation-timeline","term":"Liquidation Timeline","group":"Doing the deal","definition":"The estimated time it would take to sell off a business's assets and settle debts if it defaults. Lenders use this to assess risk and potential recovery.","url":"https://dealroom.so/glossary/liquidation-timeline","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collection","url":"https://dealroom.so/glossary/collection"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"credit-assessment","term":"Credit Assessment","group":"Reading the business","definition":"Your lender's evaluation of your and the business's ability to repay the loan. This determines if you qualify and on what terms.","url":"https://dealroom.so/glossary/credit-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"industry-specific-metric","term":"Industry-Specific Metric","group":"Reading the business","definition":"Key performance indicators (KPIs) unique to a particular industry, used to evaluate a business's health and compare it to peers. These help you understand the business's true performance beyond standard financials.","url":"https://dealroom.so/glossary/industry-specific-metric","official_sources":[],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"underwriting-framework","term":"Underwriting Framework","group":"Reading the business","definition":"The set of criteria, rules, and processes a lender uses to evaluate loan applications and assess risk. Understanding it helps you present your deal effectively.","url":"https://dealroom.so/glossary/underwriting-framework","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"program-rule","url":"https://dealroom.so/glossary/program-rule"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"program-rule","term":"Program Rule","group":"People and paperwork","definition":"Specific regulations and guidelines set by the SBA that govern the 7(a) loan program. Your deal must comply with these to get approved and funded.","url":"https://dealroom.so/glossary/program-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"eligibility","url":"https://dealroom.so/glossary/eligibility"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"releasing-guarantor","term":"Releasing Guarantor","group":"Doing the deal","definition":"The act of officially freeing a guarantor (like the seller) from their obligation on a loan. This is critical in an acquisition to ensure the seller has no lingering liability.","url":"https://dealroom.so/glossary/releasing-guarantor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"interest-rate-modification","term":"Interest Rate Modification","group":"Doing the deal","definition":"This is when the interest rate on your SBA loan changes, usually for variable-rate loans. As a buyer, you need to understand how your rate can fluctuate and what triggers these changes.","url":"https://dealroom.so/glossary/interest-rate-modification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"}]},{"slug":"sba-risk-exposure","term":"SBA Risk Exposure","group":"The loan itself","definition":"This refers to the financial risk the SBA takes by guaranteeing a portion of your loan. It's why they have strict eligibility and underwriting rules for borrowers and lenders.","url":"https://dealroom.so/glossary/sba-risk-exposure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"eligible-source","term":"Eligible Source","group":"Your money in the deal","definition":"This refers to the acceptable origins of your equity injection for an SBA loan. The SBA has specific rules about where your down payment can come from to ensure it's truly your money.","url":"https://dealroom.so/glossary/eligible-source","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"}]},{"slug":"unsubordinated-loan","term":"Unsubordinated Loan","group":"The loan itself","definition":"An unsubordinated loan means it has a higher claim on the business's assets or cash flow than other debts. The SBA generally requires its loan to be unsubordinated, with few exceptions.","url":"https://dealroom.so/glossary/unsubordinated-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"}]},{"slug":"misdemeanor-offense","term":"Misdemeanor Offense","group":"People and paperwork","definition":"A misdemeanor is a less serious crime than a felony. While it might not automatically disqualify you for an SBA loan, the SBA will scrutinize your character.","url":"https://dealroom.so/glossary/misdemeanor-offense","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"existing-lawsuit","term":"Existing Lawsuit","group":"People and paperwork","definition":"This refers to any pending legal action against the business you're buying. An existing lawsuit can pose a significant financial risk and impact the deal's viability.","url":"https://dealroom.so/glossary/existing-lawsuit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"product-liability-lawsuit","url":"https://dealroom.so/glossary/product-liability-lawsuit"},{"slug":"material-liability","url":"https://dealroom.so/glossary/material-liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"material-liability","term":"Material Liability","group":"Reading the business","definition":"A material liability is a significant financial obligation or risk that could negatively impact the business's value or future operations. These are major red flags during due diligence.","url":"https://dealroom.so/glossary/material-liability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"existing-lawsuit","url":"https://dealroom.so/glossary/existing-lawsuit"},{"slug":"product-liability-lawsuit","url":"https://dealroom.so/glossary/product-liability-lawsuit"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"product-liability-lawsuit","term":"Product Liability Lawsuit","group":"People and paperwork","definition":"This is a legal claim asserting that a product sold by the business caused harm due to a defect or inadequate warnings. These can be very costly and damaging to a business.","url":"https://dealroom.so/glossary/product-liability-lawsuit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"existing-lawsuit","url":"https://dealroom.so/glossary/existing-lawsuit"},{"slug":"material-liability","url":"https://dealroom.so/glossary/material-liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"guaranty-validity","term":"Guaranty Validity","group":"The loan itself","definition":"This refers to whether the SBA's guarantee on your loan is legally enforceable. Lenders must follow strict SBA rules to ensure the guarantee remains valid.","url":"https://dealroom.so/glossary/guaranty-validity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"disbursement-date","term":"Disbursement Date","group":"Doing the deal","definition":"This is the date when the loan funds are officially released by the lender. It's often the same day as closing, but can vary depending on the deal structure and funding requirements.","url":"https://dealroom.so/glossary/disbursement-date","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"uses-of-funds","url":"https://dealroom.so/glossary/uses-of-funds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"collateral-description","term":"Collateral Description","group":"The loan itself","definition":"This is the detailed listing of assets pledged as security for your SBA loan. It specifies exactly what the lender can seize if you default.","url":"https://dealroom.so/glossary/collateral-description","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"working-capital-loan","term":"Working Capital Loan","group":"The loan itself","definition":"This is a portion of your SBA loan specifically allocated to cover the day-to-day operating expenses of the business. It helps bridge the gap between sales and cash collection.","url":"https://dealroom.so/glossary/working-capital-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"uses-of-funds","url":"https://dealroom.so/glossary/uses-of-funds"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"trade-payable","term":"Trade Payable","group":"Reading the business","definition":"A trade payable is money owed by the business to its suppliers for goods or services purchased on credit. These are short-term liabilities on the balance sheet.","url":"https://dealroom.so/glossary/trade-payable","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"uses-of-funds","term":"Uses of Funds","group":"The loan itself","definition":"This is a detailed breakdown of how the proceeds from your SBA loan will be spent. The SBA has strict rules on what these funds can and cannot be used for.","url":"https://dealroom.so/glossary/uses-of-funds","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"working-capital-loan","url":"https://dealroom.so/glossary/working-capital-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"source-of-repayment","term":"Source of Repayment","group":"Reading the business","definition":"This refers to where the money will come from to pay back the SBA loan. As a buyer, you need to be sure the business generates enough profit to cover all loan payments.","url":"https://dealroom.so/glossary/source-of-repayment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"omission-of-fact","term":"Omission of Fact","group":"People and paperwork","definition":"This is failing to disclose important information, even if unintentional, that could influence a lender's decision or the deal's terms. It's serious because it can lead to loan denial or even fraud allegations.","url":"https://dealroom.so/glossary/omission-of-fact","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"fraudulent-financial-statement","term":"Fraudulent Financial Statement","group":"People and paperwork","definition":"This is a financial document containing false or misleading information, often used to inflate a business's value or performance. Relying on one can lead to buying a business worth less than you paid, and it's a crime.","url":"https://dealroom.so/glossary/fraudulent-financial-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"misrepresentation","url":"https://dealroom.so/glossary/misrepresentation"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"lender-s-default","term":"Lender's Default","group":"Doing the deal","definition":"This occurs when the lender fails to uphold its obligations under the loan agreement, like failing to disburse funds. It's rare but can disrupt your acquisition and cause financial harm.","url":"https://dealroom.so/glossary/lender-s-default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"credit-enhancement","term":"Credit Enhancement","group":"The loan itself","definition":"This is anything that reduces the lender's risk, making a loan more attractive or possible. For you, it might mean bringing more equity or collateral to the deal.","url":"https://dealroom.so/glossary/credit-enhancement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"shared-risk","term":"Shared Risk","group":"The loan itself","definition":"This refers to how the risk of a loan default is divided between the lender and the SBA. The SBA doesn't guarantee 100% of your loan.","url":"https://dealroom.so/glossary/shared-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"credit-enhancement","url":"https://dealroom.so/glossary/credit-enhancement"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"statutory-limit","term":"Statutory Limit","group":"The loan itself","definition":"This is the maximum loan amount an SBA 7(a) loan can be, set by law. It means you can't borrow more than this amount through the program.","url":"https://dealroom.so/glossary/statutory-limit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"uses-of-proceeds","url":"https://dealroom.so/glossary/uses-of-proceeds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"eligible-small-business-concern","term":"Eligible Small Business Concern","group":"People and paperwork","definition":"This is the SBA's definition of a business that qualifies for an SBA loan, based on size standards and certain activities. If the business you want to buy doesn't meet this, you can't get an SBA loan.","url":"https://dealroom.so/glossary/eligible-small-business-concern","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"owner-equity","term":"Owner Equity","group":"Your money in the deal","definition":"This is the cash you, as the buyer, put into the deal. It's your stake in the business and a key requirement for any SBA loan.","url":"https://dealroom.so/glossary/owner-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"third-party-report","term":"Third-Party Report","group":"Reading the business","definition":"This is a report from an independent professional evaluating a specific aspect of the business, like an appraisal or environmental assessment. Lenders often require these to verify assets or uncover risks.","url":"https://dealroom.so/glossary/third-party-report","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"useful-life-of-the-asset","term":"Useful Life of the Asset","group":"Reading the business","definition":"This is how long an asset is expected to be productive and generate revenue for the business. Lenders typically tie the loan term to the weighted average useful life of the assets being financed.","url":"https://dealroom.so/glossary/useful-life-of-the-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"uses-of-proceeds","term":"Uses of Proceeds","group":"The loan itself","definition":"This details exactly what the SBA loan money will be spent on, such as buying the business, inventory, or working capital. The SBA has strict rules on what the funds can be used for.","url":"https://dealroom.so/glossary/uses-of-proceeds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"unlimited-and-unconditional","term":"Unlimited and Unconditional","group":"People and paperwork","definition":"This describes the nature of the personal guarantee required from all owners of 20% or more of the business. It means you are personally responsible for the full loan amount, no matter what.","url":"https://dealroom.so/glossary/unlimited-and-unconditional","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"permanent-resident","term":"Permanent Resident","group":"People and paperwork","definition":"This refers to an individual who has been granted the right to live permanently in the U.S. and can qualify for an SBA loan if they meet other eligibility requirements.","url":"https://dealroom.so/glossary/permanent-resident","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"bank-fraud","term":"Bank Fraud","group":"People and paperwork","definition":"Intentionally deceiving a bank for financial gain. If you or the seller have a history of bank fraud, it's a major red flag for the SBA and will likely disqualify the loan.","url":"https://dealroom.so/glossary/bank-fraud","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"sba-504-refinance","term":"SBA 504 Refinance","group":"The loan itself","definition":"A different type of SBA loan, the 504, primarily used for real estate and equipment, can be refinanced. This is distinct from a 7(a) loan, which is more flexible for business acquisitions.","url":"https://dealroom.so/glossary/sba-504-refinance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"refinance-existing-debt","url":"https://dealroom.so/glossary/refinance-existing-debt"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"}]},{"slug":"owner-buyout","term":"Owner Buyout","group":"Doing the deal","definition":"The purchase of one owner's share of a business by another existing owner. The SBA 7(a) program supports these buyouts under specific conditions.","url":"https://dealroom.so/glossary/owner-buyout","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"fixed-rate-treasury","term":"Fixed Rate Treasury","group":"The loan itself","definition":"Refers to the interest rate on an SBA loan being tied to a specific Treasury index, with a fixed spread added by the lender. This gives you a consistent interest rate for the life of the loan.","url":"https://dealroom.so/glossary/fixed-rate-treasury","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"treasury-index","url":"https://dealroom.so/glossary/treasury-index"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"}]},{"slug":"refinance-existing-debt","term":"Refinance Existing Debt","group":"The loan itself","definition":"Using a new loan to pay off one or more existing business debts. An SBA 7(a) loan can be used for this purpose, often to consolidate or extend repayment terms.","url":"https://dealroom.so/glossary/refinance-existing-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"eligible-use-of-proceeds","url":"https://dealroom.so/glossary/eligible-use-of-proceeds"},{"slug":"extended-term","url":"https://dealroom.so/glossary/extended-term"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"eligible-use-of-proceeds","term":"Eligible Use of Proceeds","group":"The loan itself","definition":"The specific purposes for which an SBA 7(a) loan can be used, as defined by SBA rules. This includes business acquisition, working capital, real estate, and equipment.","url":"https://dealroom.so/glossary/eligible-use-of-proceeds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"fixed-asset-acquisition","url":"https://dealroom.so/glossary/fixed-asset-acquisition"},{"slug":"inventory-acquisition","url":"https://dealroom.so/glossary/inventory-acquisition"}]},{"slug":"extended-term","term":"Extended Term","group":"The loan itself","definition":"Refers to a longer repayment period for your loan, up to 10 years for a business acquisition and 25 years if real estate is included. This typically lowers monthly payments.","url":"https://dealroom.so/glossary/extended-term","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"fixed-asset-acquisition","term":"Fixed Asset Acquisition","group":"Reading the business","definition":"The purchase of long-term assets like buildings, machinery, or equipment. An SBA 7(a) loan can fund these acquisitions as part of a business purchase.","url":"https://dealroom.so/glossary/fixed-asset-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"inventory-acquisition","term":"Inventory Acquisition","group":"Reading the business","definition":"The purchase of a business's current stock of goods for sale. This is a common and eligible use of 7(a) loan proceeds when buying a business.","url":"https://dealroom.so/glossary/inventory-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"eligible-use-of-proceeds","url":"https://dealroom.so/glossary/eligible-use-of-proceeds"}]},{"slug":"gambling-operation","term":"Gambling Operation","group":"People and paperwork","definition":"Businesses primarily engaged in gambling are ineligible for SBA 7(a) loans. This is a strict rule to prevent federal funds from supporting certain industries.","url":"https://dealroom.so/glossary/gambling-operation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"restitution","term":"Restitution","group":"People and paperwork","definition":"Financial compensation ordered by a court to victims of a crime. Unpaid restitution from the buyer or seller can hinder loan approval.","url":"https://dealroom.so/glossary/restitution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"prudent-lending-practice","term":"Prudent Lending Practice","group":"Doing the deal","definition":"Standardized, responsible lending behaviors that minimize risk for the lender and align with industry norms. SBA lenders must adhere to these practices, even with the government guarantee.","url":"https://dealroom.so/glossary/prudent-lending-practice","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"treasury-index","term":"Treasury Index","group":"The loan itself","definition":"A benchmark interest rate based on U.S. Treasury securities. SBA loan interest rates can be tied to a Treasury Index plus a lender's spread.","url":"https://dealroom.so/glossary/treasury-index","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fixed-rate-treasury","url":"https://dealroom.so/glossary/fixed-rate-treasury"},{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"}]},{"slug":"business-financial-statement","term":"Business Financial Statement","group":"Reading the business","definition":"Formal records summarizing a business's financial activities and position. These include the Profit & Loss Statement, Balance Sheet, and Cash Flow Statement, which are crucial for due diligence.","url":"https://dealroom.so/glossary/business-financial-statement","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"profit-loss-statement","term":"Profit & Loss Statement","aka":"P&L","group":"Reading the business","definition":"A financial report showing a business's revenues, costs, and profits over a period. It's crucial for understanding the historical profitability and cash flow generation of the target business.","url":"https://dealroom.so/glossary/profit-loss-statement","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"net-income-after-federal-income-taxes","url":"https://dealroom.so/glossary/net-income-after-federal-income-taxes"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"personal-expense","term":"Personal Expense","group":"Reading the business","definition":"Business funds used by the owner for personal benefit, often hidden within company financials. Identifying and \"adding back\" these expenses is key to seeing the true profitability available to a new owner.","url":"https://dealroom.so/glossary/personal-expense","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"credit-card-debt","term":"Credit Card Debt","group":"Reading the business","definition":"Debt incurred through credit cards, which can be personal or business-related. High levels, especially personal, can signal financial stress and impact your eligibility for a loan.","url":"https://dealroom.so/glossary/credit-card-debt","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"business-collateral","term":"Business Collateral","group":"The loan itself","definition":"Assets of the target business (e.g., equipment, inventory, accounts receivable) pledged to the lender as security for the loan. If you default, the lender can seize and sell these assets.","url":"https://dealroom.so/glossary/business-collateral","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"eligible-borrower","term":"Eligible Borrower","group":"People and paperwork","definition":"The set of criteria an individual or business must meet to qualify for an SBA loan, covering citizenship, character, and business type. If you don't meet these, you won't get the loan.","url":"https://dealroom.so/glossary/eligible-borrower","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"sofr-abr","term":"SOFR ABR","group":"The loan itself","definition":"An acronym for Secured Overnight Financing Rate, Adjusted Base Rate, which is a common index used to determine the variable interest rate on SBA 7(a) loans. It fluctuates daily, impacting your monthly payment.","url":"https://dealroom.so/glossary/sofr-abr","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"}]},{"slug":"hedging-strategy","term":"Hedging Strategy","group":"Doing the deal","definition":"A financial technique used to offset potential losses from market fluctuations, such as rising interest rates on a variable-rate loan. Buyers can use it to manage risk.","url":"https://dealroom.so/glossary/hedging-strategy","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"sofr-abr","url":"https://dealroom.so/glossary/sofr-abr"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"risk-management","url":"https://dealroom.so/glossary/risk-management"}]},{"slug":"five-c-s-of-credit","term":"Five C's of Credit","aka":"5 Cs","group":"Reading the business","definition":"The five critical factors lenders assess when evaluating a loan application: Character, Capacity, Capital, Collateral, and Conditions. Understanding these helps you prepare a strong application.","url":"https://dealroom.so/glossary/five-c-s-of-credit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"net-income-after-federal-income-taxes","term":"Net Income After Federal Income Taxes","group":"Reading the business","definition":"The ultimate profit a business makes after all expenses, including federal income taxes, have been deducted. It's the bottom line on the Profit & Loss Statement.","url":"https://dealroom.so/glossary/net-income-after-federal-income-taxes","official_sources":[],"related":[{"slug":"profit-loss-statement","url":"https://dealroom.so/glossary/profit-loss-statement"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"first-collateral-assignee","term":"First Collateral Assignee","group":"Doing the deal","definition":"The party (usually the SBA lender) that holds the primary claim or lien on the collateral pledged for a loan. They get paid first if the business defaults.","url":"https://dealroom.so/glossary/first-collateral-assignee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"plp-status","term":"PLP Status","aka":"Preferred Lender Program Status","group":"People and paperwork","definition":"A designation from the SBA that allows certain lenders to make loan decisions without prior SBA review. This speeds up the approval process significantly.","url":"https://dealroom.so/glossary/plp-status","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"}]},{"slug":"voluntary-workout-option","term":"Voluntary Workout Option","group":"Doing the deal","definition":"An agreement between a borrower and lender to modify loan terms to avoid default, typically when the borrower faces financial difficulty. It's a structured path to prevent formal liquidation.","url":"https://dealroom.so/glossary/voluntary-workout-option","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"deferment-period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"site-visit","term":"Site Visit","group":"Reading the business","definition":"A physical inspection of the business premises by the lender or an appraiser. It verifies the business's existence, condition of assets, and operational reality.","url":"https://dealroom.so/glossary/site-visit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"formal-loan-agreement","term":"Formal Loan Agreement","group":"People and paperwork","definition":"The legally binding contract between you (the borrower) and the lender, detailing all terms and conditions of your SBA loan. This is the document you sign at closing.","url":"https://dealroom.so/glossary/formal-loan-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"note","url":"https://dealroom.so/glossary/note"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"non-curable-defect","term":"Non-Curable Defect","group":"Doing the deal","definition":"A non-curable defect is a problem with the loan or the borrower that cannot be fixed, making the loan ineligible for an SBA guarantee. This issue means the deal cannot close with SBA financing.","url":"https://dealroom.so/glossary/non-curable-defect","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"repair-or-denial-of-the-sba-guarantee","url":"https://dealroom.so/glossary/repair-or-denial-of-the-sba-guarantee"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"waiving-a-lien","term":"Waiving a Lien","group":"Doing the deal","definition":"Waiving a lien means a creditor gives up their legal claim on an asset. This is often necessary for the SBA lender to secure a first lien position on collateral, making the loan viable.","url":"https://dealroom.so/glossary/waiving-a-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"readily-marketable-personal-asset","term":"Readily Marketable Personal Asset","group":"Your money in the deal","definition":"A readily marketable personal asset is something you own personally that can be quickly converted to cash, like publicly traded stocks or bonds. The SBA might require you to use these assets to reduce a collateral shortfall.","url":"https://dealroom.so/glossary/readily-marketable-personal-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"mitigant","term":"Mitigant","group":"Reading the business","definition":"A mitigant is a factor or condition that reduces a recognized risk. Lenders look for mitigants to offset potential weaknesses in a deal, improving its chances of approval.","url":"https://dealroom.so/glossary/mitigant","official_sources":[],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"}]},{"slug":"delegated-action","term":"Delegated Action","group":"People and paperwork","definition":"A delegated action is a decision made by a Preferred Lender Program (PLP) lender without prior SBA review. This speeds up the loan approval process, as the lender has the authority to approve the SBA guarantee directly.","url":"https://dealroom.so/glossary/delegated-action","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"non-delegated-lender","url":"https://dealroom.so/glossary/non-delegated-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"ordinary-course-of-business","term":"Ordinary Course of Business","group":"Reading the business","definition":"This refers to the normal, day-to-day operations and transactions of a business. Lenders assess whether the business has been operating in its ordinary course to understand its true financial performance and avoid unusual, one-off events.","url":"https://dealroom.so/glossary/ordinary-course-of-business","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"not-for-profit-business","term":"Not-for-Profit Business","group":"People and paperwork","definition":"A not-for-profit business is an organization whose primary purpose is something other than making a profit for its owners. Generally, these businesses are ineligible for SBA 7(a) loans, with limited exceptions.","url":"https://dealroom.so/glossary/not-for-profit-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"target-company","url":"https://dealroom.so/glossary/target-company"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"absolute-right-of-first-refusal","term":"Absolute Right of First Refusal","group":"Doing the deal","definition":"This is a contractual right giving a party the first chance to buy an asset or business if it's offered for sale, usually on the same terms as another bona fide offer. It can complicate or block your acquisition.","url":"https://dealroom.so/glossary/absolute-right-of-first-refusal","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"contract","url":"https://dealroom.so/glossary/contract"}]},{"slug":"without-cause","term":"Without Cause","group":"Doing the deal","definition":"\"Without cause\" refers to termination of an agreement or employment for any reason, provided it's not for a specific breach or wrongdoing. This clause gives flexibility but also carries a cost, like severance.","url":"https://dealroom.so/glossary/without-cause","official_sources":[],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"employment-agreement","url":"https://dealroom.so/glossary/employment-agreement"}]},{"slug":"high-leverage","term":"High Leverage","group":"Reading the business","definition":"High leverage means a business relies heavily on debt to finance its operations or assets. While common in acquisitions, excessive leverage can signal higher risk and strain cash flow, impacting your ability to repay the SBA loan.","url":"https://dealroom.so/glossary/high-leverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"target-company","term":"Target Company","group":"Doing the deal","definition":"The target company is the business you are seeking to acquire. It's the focus of your due diligence and the entity that will ultimately be purchased.","url":"https://dealroom.so/glossary/target-company","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"voting-right","term":"Voting Right","group":"People and paperwork","definition":"A voting right is the power to cast a ballot in decisions affecting a company, typically held by shareholders or partners. It determines who controls the business and its strategic direction.","url":"https://dealroom.so/glossary/voting-right","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"guaranty-request","term":"Guaranty Request","group":"The loan itself","definition":"A guaranty request is the formal application submitted by your lender to the SBA asking for the federal guarantee on your loan. This is a critical step in securing SBA financing.","url":"https://dealroom.so/glossary/guaranty-request","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"non-delegated-lender","url":"https://dealroom.so/glossary/non-delegated-lender"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"}]},{"slug":"repair-or-denial-of-the-sba-guarantee","term":"Repair or Denial of the SBA Guarantee","group":"The loan itself","definition":"If a lender made errors or failed to follow SBA rules, the SBA might reduce (repair) or completely revoke (deny) its guarantee when the loan defaults. This shifts risk back to the lender.","url":"https://dealroom.so/glossary/repair-or-denial-of-the-sba-guarantee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"non-curable-defect","url":"https://dealroom.so/glossary/non-curable-defect"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"mixed-use-loan","term":"Mixed-Use Loan","group":"The loan itself","definition":"Loan for real estate that combines business operations with rental income, like a restaurant with apartments above. Buyer cares because it can be an eligible use of SBA funds, but the rental portion has rules.","url":"https://dealroom.so/glossary/mixed-use-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"blended-term","term":"Blended Term","group":"The loan itself","definition":"When an SBA loan includes financing for both real estate and a business acquisition, the loan term is \"blended\" to accommodate different asset types. Buyer cares because it impacts the overall loan repayment schedule and monthly payments.","url":"https://dealroom.so/glossary/blended-term","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"maximum-loan-term","url":"https://dealroom.so/glossary/maximum-loan-term"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"short-term-conventional-loan","term":"Short-Term Conventional Loan","group":"The loan itself","definition":"A traditional bank loan, not backed by the SBA, typically with a shorter repayment period than an SBA loan. Buyer cares because these often have stricter collateral requirements and less flexible terms than a 7(a).","url":"https://dealroom.so/glossary/short-term-conventional-loan","official_sources":[],"related":[{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"temporary-deferment","term":"Temporary Deferment","group":"Doing the deal","definition":"A temporary pause in your loan payments, usually for principal and sometimes interest, granted by the lender under specific circumstances. Buyer cares because it can provide crucial breathing room if the business faces unexpected early challenges.","url":"https://dealroom.so/glossary/temporary-deferment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"deferment-period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"federally-guaranteed-loan","term":"Federally Guaranteed Loan","group":"The loan itself","definition":"A loan where a government agency, like the SBA, promises to repay a portion to the lender if the borrower defaults. Buyer cares because this guarantee reduces lender risk, making it easier for small businesses to get loans.","url":"https://dealroom.so/glossary/federally-guaranteed-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"claim-on-the-sba-guarantee","term":"Claim on the SBA Guarantee","group":"The loan itself","definition":"What happens when a borrower defaults on an SBA loan and the lender asks the SBA to honor its guarantee and pay the guaranteed portion. Buyer cares because this is the ultimate consequence of a defaulted SBA loan from the lender's perspective.","url":"https://dealroom.so/glossary/claim-on-the-sba-guarantee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"maximum-loan-term","term":"Maximum Loan Term","group":"The loan itself","definition":"The longest period over which an SBA loan can be repaid, set by SBA rules. Buyer cares because a longer term means lower monthly payments and better cash flow, which is crucial for business stability.","url":"https://dealroom.so/glossary/maximum-loan-term","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"blended-term","url":"https://dealroom.so/glossary/blended-term"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"maximum-allowable-cap","term":"Maximum Allowable Cap","group":"The loan itself","definition":"The highest interest rate a lender can charge on an SBA loan, determined by SBA regulations. Buyer cares because this protects you from excessive interest rates and helps you estimate your maximum loan cost.","url":"https://dealroom.so/glossary/maximum-allowable-cap","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"statutory-cap","url":"https://dealroom.so/glossary/statutory-cap"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"}]},{"slug":"markup","term":"Markup","group":"Reading the business","definition":"The difference between a product's cost and its selling price, expressed as a percentage of cost. Buyer cares because it directly impacts gross profit and the business's overall profitability.","url":"https://dealroom.so/glossary/markup","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"consolidate-existing-business-debt","term":"Consolidate Existing Business Debt","group":"The loan itself","definition":"Using a new SBA 7(a) loan to pay off multiple existing business debts, simplifying payments and potentially lowering interest rates. Buyer cares because it can streamline finances and improve cash flow post-acquisition.","url":"https://dealroom.so/glossary/consolidate-existing-business-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"interest-cost","term":"Interest Cost","group":"Reading the business","definition":"The total amount of money paid by the borrower for the use of borrowed funds over the life of a loan. Buyer cares because it's a significant expense that impacts the business's profitability and cash flow.","url":"https://dealroom.so/glossary/interest-cost","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"sba-eligible","term":"SBA Eligible","group":"People and paperwork","definition":"Refers to a business, borrower, or loan use that meets the specific criteria set by the Small Business Administration for its loan programs. Buyer cares because if any part of the deal isn't SBA Eligible, you can't get an SBA loan.","url":"https://dealroom.so/glossary/sba-eligible","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"annual-ongoing-servicing-fee","term":"Annual Ongoing Servicing Fee","aka":"Annual Service Fee, Annual Guarantee Fee","group":"The loan itself","definition":"A small yearly fee paid by the borrower to the SBA for maintaining the loan guarantee, calculated on the outstanding guaranteed portion. Buyer cares because it's an additional, ongoing cost of having an SBA loan.","url":"https://dealroom.so/glossary/annual-ongoing-servicing-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"statutory-cap","term":"Statutory Cap","group":"The loan itself","definition":"A legal limit set by statute on certain aspects of an SBA loan, most commonly the maximum interest rate or loan amount. Buyer cares because it defines the boundaries of what's possible with SBA financing.","url":"https://dealroom.so/glossary/statutory-cap","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"maximum-allowable-cap","url":"https://dealroom.so/glossary/maximum-allowable-cap"},{"slug":"maximum-loan-term","url":"https://dealroom.so/glossary/maximum-loan-term"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"sba-caplines","term":"SBA CapLines","group":"The loan itself","definition":"These are revolving lines of credit designed for specific short-term business needs like seasonal inventory or contract financing. While technically an SBA 7(a) product, they're rarely used for small business acquisitions.","url":"https://dealroom.so/glossary/sba-caplines","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"microloan-program","term":"Microloan Program","group":"The loan itself","definition":"This SBA program provides small loans, up to $50,000, primarily for working capital or inventory to small businesses, often startups. It's not structured for typical business acquisitions.","url":"https://dealroom.so/glossary/microloan-program","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"cash-equivalent","term":"Cash Equivalent","group":"Reading the business","definition":"This refers to highly liquid assets easily convertible to cash, like short-term government bonds or money market funds. For a buyer, knowing what counts as cash equivalent helps assess a business's true liquidity.","url":"https://dealroom.so/glossary/cash-equivalent","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"contributed-asset","term":"Contributed Asset","group":"Your money in the deal","definition":"This is an asset, other than cash, that a buyer brings into the business as part of their equity injection. The SBA allows certain assets to count towards your required down payment.","url":"https://dealroom.so/glossary/contributed-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"unencumbered-source","url":"https://dealroom.so/glossary/unencumbered-source"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"unencumbered-source","term":"Unencumbered Source","group":"Your money in the deal","definition":"This means funds or assets for your equity injection that are free and clear of any liens, pledges, or claims by other creditors. The SBA requires your injection to come from such sources.","url":"https://dealroom.so/glossary/unencumbered-source","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"contributed-asset","url":"https://dealroom.so/glossary/contributed-asset"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"unresolved-tax-lien","term":"Unresolved Tax Lien","group":"People and paperwork","definition":"This is a legal claim by a government entity (like the IRS) against a person's or business's assets due to unpaid taxes. An unresolved lien can block an SBA loan approval.","url":"https://dealroom.so/glossary/unresolved-tax-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"raw-land","term":"Raw Land","group":"The loan itself","definition":"This refers to undeveloped land without structures or utilities. The SBA generally does not allow 7(a) loan proceeds to be used for the purchase of raw land if it's purely for investment.","url":"https://dealroom.so/glossary/raw-land","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"regulator","term":"Regulator","group":"People and paperwork","definition":"A government agency or body that sets and enforces rules for specific industries or activities. 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All principal owners of a borrower business must personally guarantee an SBA 7(a) loan.","url":"https://dealroom.so/glossary/principal-owner","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"sba-form-1919-disclosure","term":"SBA Form 1919 Disclosure","group":"People and paperwork","definition":"This is the Borrower Information Form, a critical document where you disclose personal and business information required for an SBA loan application. It confirms eligibility and identifies key principals.","url":"https://dealroom.so/glossary/sba-form-1919-disclosure","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-request","url":"https://dealroom.so/glossary/loan-request"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"}]},{"slug":"score-mentor","term":"SCORE Mentor","group":"People and paperwork","definition":"SCORE is a non-profit organization providing free business mentoring and resources, often by retired executives. They can offer guidance to small business owners.","url":"https://dealroom.so/glossary/score-mentor","official_sources":[],"related":[{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"loan-request","term":"Loan Request","group":"Doing the deal","definition":"This is your formal application to a lender, outlining the amount you need, its purpose, and how you plan to repay it. It kicks off the underwriting process.","url":"https://dealroom.so/glossary/loan-request","official_sources":[],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"sba-form-1919-disclosure","url":"https://dealroom.so/glossary/sba-form-1919-disclosure"}]},{"slug":"government-regulation","term":"Government Regulation","group":"People and paperwork","definition":"Rules and laws imposed by government bodies that dictate how businesses must operate. Compliance is crucial to avoid penalties and legal issues.","url":"https://dealroom.so/glossary/government-regulation","official_sources":[],"related":[{"slug":"regulator","url":"https://dealroom.so/glossary/regulator"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"primary-lender","term":"Primary Lender","group":"People and paperwork","definition":"This is the financial institution (bank or credit union) that actually funds and services your SBA 7(a) loan. They handle all direct interactions with you.","url":"https://dealroom.so/glossary/primary-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"collateral-seizure","term":"Collateral Seizure","group":"The loan itself","definition":"What happens when a lender takes possession of assets pledged for a loan due to default. For you, it means losing the business assets you put up if you can't pay.","url":"https://dealroom.so/glossary/collateral-seizure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"default-procedure","url":"https://dealroom.so/glossary/default-procedure"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"default-procedure","term":"Default Procedure","group":"The loan itself","definition":"The formal steps a lender takes when a borrower fails to meet loan terms, like missing payments. Understanding this process is key to knowing your risks.","url":"https://dealroom.so/glossary/default-procedure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-seizure","url":"https://dealroom.so/glossary/collateral-seizure"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"}]},{"slug":"hazard-insurance","term":"Hazard Insurance","group":"Reading the business","definition":"Protects the business's physical assets, like buildings and equipment, from damage due to events like fire or storms. Lenders require this to protect their collateral.","url":"https://dealroom.so/glossary/hazard-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"assets","url":"https://dealroom.so/glossary/assets"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liability-insurance","url":"https://dealroom.so/glossary/liability-insurance"},{"slug":"business-interruption-insurance","url":"https://dealroom.so/glossary/business-interruption-insurance"}]},{"slug":"liability-insurance","term":"Liability Insurance","group":"Reading the business","definition":"Protects the business against claims of injury or damage to third parties. It's crucial for managing operational risks and protecting your investment from lawsuits.","url":"https://dealroom.so/glossary/liability-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"hazard-insurance","url":"https://dealroom.so/glossary/hazard-insurance"},{"slug":"business-interruption-insurance","url":"https://dealroom.so/glossary/business-interruption-insurance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"additional-insured","term":"Additional Insured","group":"People and paperwork","definition":"A party, like your lender, listed on your insurance policy to receive protection under certain circumstances. This ensures the lender's interest in your business assets is covered.","url":"https://dealroom.so/glossary/additional-insured","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"hazard-insurance","url":"https://dealroom.so/glossary/hazard-insurance"},{"slug":"liability-insurance","url":"https://dealroom.so/glossary/liability-insurance"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"business-interruption-insurance","term":"Business Interruption Insurance","group":"Reading the business","definition":"Covers lost income and operating expenses if your business temporarily closes due to a covered event. This keeps cash flow going when you can't operate.","url":"https://dealroom.so/glossary/business-interruption-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"hazard-insurance","url":"https://dealroom.so/glossary/hazard-insurance"},{"slug":"liability-insurance","url":"https://dealroom.so/glossary/liability-insurance"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"prudent-lending","term":"Prudent Lending","group":"The loan itself","definition":"The principle that lenders must make sound, responsible lending decisions, ensuring loans are likely to be repaid. The SBA expects its lenders to follow this standard.","url":"https://dealroom.so/glossary/prudent-lending","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting-standards","url":"https://dealroom.so/glossary/underwriting-standards"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"remitting","term":"Remitting","group":"The loan itself","definition":"The act of sending money, often referring to the borrower sending payments to the lender. For 7(a) loans, it's how you make your monthly principal and interest payments.","url":"https://dealroom.so/glossary/remitting","official_sources":[],"related":[{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"underwriting-standards","term":"Underwriting Standards","group":"Reading the business","definition":"The criteria and policies a lender uses to evaluate a borrower's creditworthiness and the risk of a loan. You need to meet these to get approved.","url":"https://dealroom.so/glossary/underwriting-standards","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"prudent-lending","url":"https://dealroom.so/glossary/prudent-lending"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"personal-income-tax-return","term":"Personal Income Tax Return","group":"People and paperwork","definition":"Your annual tax filing with the IRS detailing your personal income, deductions, and tax liability. Lenders use these to verify your personal financial health.","url":"https://dealroom.so/glossary/personal-income-tax-return","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"}]},{"slug":"assets","term":"Assets","group":"Reading the business","definition":"Items of value owned by the business, like cash, inventory, equipment, or real estate. These are what you acquire and what the bank might use as collateral.","url":"https://dealroom.so/glossary/assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"real-estate-financing","term":"Real Estate Financing","group":"The loan itself","definition":"A loan specifically used to purchase or refinance commercial real estate. An SBA 7(a) loan can include financing for owner-occupied business real estate.","url":"https://dealroom.so/glossary/real-estate-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"conventional-lender","term":"Conventional Lender","group":"People and paperwork","definition":"A bank or financial institution that offers loans without a government guarantee. They have their own underwriting standards, which can be stricter than SBA loans.","url":"https://dealroom.so/glossary/conventional-lender","official_sources":[],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting-standards","url":"https://dealroom.so/glossary/underwriting-standards"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"final-disbursement","term":"Final Disbursement","group":"Doing the deal","definition":"The last release of funds from your loan, typically occurring after all closing conditions are met. This is when the seller receives their full payment.","url":"https://dealroom.so/glossary/final-disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"pre-closing","term":"Pre-Closing","group":"Doing the deal","definition":"This is the crucial period after your loan is approved but before funds are disbursed, where all final documents are prepared and reviewed. It's when you ensure everything is ready for a smooth transfer of ownership and funds.","url":"https://dealroom.so/glossary/pre-closing","official_sources":[],"related":[{"slug":"loan-sale-agreement","url":"https://dealroom.so/glossary/loan-sale-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"loan-sale-agreement","term":"Loan Sale Agreement","group":"Doing the deal","definition":"This agreement details the terms under which the SBA 7(a) loan will be sold from the originating lender to a secondary market investor. While it doesn't directly impact you, it's part of the lender's process to free up capital for more loans.","url":"https://dealroom.so/glossary/loan-sale-agreement","official_sources":[],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"sba-sop","term":"SBA SOP","aka":"SBA Standard Operating Procedures","group":"People and paperwork","definition":"These are the detailed instructions and rules that lenders must follow when originating, underwriting, closing, servicing, and liquidating SBA 7(a) loans. They dictate how your loan application is processed and approved.","url":"https://dealroom.so/glossary/sba-sop","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"extraordinary-liquidation-expense","term":"Extraordinary Liquidation Expense","group":"The loan itself","definition":"These are unusual costs incurred by the lender during the process of liquidating a defaulted SBA loan, often requiring special approval from the SBA. For a buyer, this term highlights the potential for unexpected costs if a loan goes bad.","url":"https://dealroom.so/glossary/extraordinary-liquidation-expense","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"industry-risk","term":"Industry Risk","group":"Reading the business","definition":"This refers to the inherent risks associated with the specific industry in which the target business operates, such as economic downturns, technological disruption, or regulatory changes. It directly impacts the business's stability and future cash flow.","url":"https://dealroom.so/glossary/industry-risk","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"interim-financials","term":"Interim Financials","group":"Reading the business","definition":"These are financial statements (like P&L and Balance Sheet) prepared for a period shorter than a full fiscal year, typically quarterly or monthly, to show recent performance. They provide a current snapshot of the business's health beyond the last tax return.","url":"https://dealroom.so/glossary/interim-financials","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"total-control-rule","term":"Total Control Rule","group":"The loan itself","definition":"This SBA rule requires that a borrower, typically the small business owner, must have complete control over the business receiving the loan proceeds. It prevents loans from going to businesses where control is diluted or held by ineligible parties.","url":"https://dealroom.so/glossary/total-control-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"retained-seller-interest","url":"https://dealroom.so/glossary/retained-seller-interest"},{"slug":"passive-investor","url":"https://dealroom.so/glossary/passive-investor"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"economic-dependence","term":"Economic Dependence","group":"Reading the business","definition":"This describes a situation where a business relies heavily on a single customer, supplier, or contract for a disproportionate amount of its revenue or operations. It's a major risk factor for any buyer.","url":"https://dealroom.so/glossary/economic-dependence","official_sources":[],"related":[{"slug":"industry-risk","url":"https://dealroom.so/glossary/industry-risk"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"residency-requirement","term":"Residency Requirement","group":"People and paperwork","definition":"This SBA rule states that all owners of 20% or more of the borrowing business must be U.S. citizens or Qualified Aliens residing in the U.S. It's a fundamental eligibility criterion for the loan.","url":"https://dealroom.so/glossary/residency-requirement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"residency-verification","url":"https://dealroom.so/glossary/residency-verification"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"residency-verification","term":"Residency Verification","group":"People and paperwork","definition":"This is the process where the lender confirms that all owners of 20% or more of the business meet the SBA's U.S. citizen or Qualified Alien residency requirement. It's a mandatory part of the loan application.","url":"https://dealroom.so/glossary/residency-verification","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"residency-requirement","url":"https://dealroom.so/glossary/residency-requirement"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"passive-investor","term":"Passive Investor","group":"Your money in the deal","definition":"This is an investor who contributes capital but has no operational control or management responsibilities in the business. The SBA has strict rules about their involvement to ensure the primary borrower maintains control.","url":"https://dealroom.so/glossary/passive-investor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-control-rule","url":"https://dealroom.so/glossary/total-control-rule"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"retained-seller-interest","url":"https://dealroom.so/glossary/retained-seller-interest"},{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"}]},{"slug":"bona-fide-change-of-ownership","term":"Bona Fide Change of Ownership","group":"Doing the deal","definition":"This refers to a genuine and complete transfer of ownership and control of a business from the seller to the buyer. The SBA requires this for 7(a) acquisition loans to ensure a true sale, not just a restructuring.","url":"https://dealroom.so/glossary/bona-fide-change-of-ownership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"retained-seller-interest","url":"https://dealroom.so/glossary/retained-seller-interest"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-acquisition","url":"https://dealroom.so/glossary/partial-acquisition"}]},{"slug":"retained-seller-interest","term":"Retained Seller Interest","group":"Your money in the deal","definition":"This occurs when the seller retains some ownership (equity) in the business after the sale. The SBA has strict limits on this to ensure the buyer has full control and is genuinely buying the business.","url":"https://dealroom.so/glossary/retained-seller-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"total-control-rule","url":"https://dealroom.so/glossary/total-control-rule"}]},{"slug":"partial-acquisition","term":"Partial Acquisition","group":"Doing the deal","definition":"This is when a buyer only purchases a portion of a business, rather than the entire entity. The SBA 7(a) loan program generally requires a complete acquisition of an existing business.","url":"https://dealroom.so/glossary/partial-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"bona-fide-change-of-ownership","url":"https://dealroom.so/glossary/bona-fide-change-of-ownership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"}]},{"slug":"deferred-maintenance","term":"Deferred Maintenance","group":"Reading the business","definition":"This is necessary repairs or upkeep that have been put off. It's important because it represents hidden costs you'll have to pay after closing to keep the business operating, impacting your post-acquisition cash flow.","url":"https://dealroom.so/glossary/deferred-maintenance","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"collateral-risk","term":"Collateral Risk","group":"Reading the business","definition":"This refers to the risk that the collateral securing your loan is insufficient to cover the loan amount if the business fails. Lenders assess this to determine if they can recover their investment.","url":"https://dealroom.so/glossary/collateral-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"perfection-of-lien","term":"Perfection of Lien","group":"Doing the deal","definition":"This is the legal process lenders use to publicly establish their security interest in your collateral, giving them priority over other creditors. It ensures the lender has a valid claim if the loan defaults.","url":"https://dealroom.so/glossary/perfection-of-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"specific-lien","term":"Specific Lien","group":"Doing the deal","definition":"A specific lien attaches to a particular asset, like a piece of equipment or real estate. It gives the creditor a claim only on that designated item, not all your assets.","url":"https://dealroom.so/glossary/specific-lien","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"liquid-guarantor","term":"Liquid Guarantor","group":"People and paperwork","definition":"This is an individual who personally guarantees an SBA loan and has sufficient personal cash or marketable securities to cover potential losses. Lenders look for this to strengthen the loan's security.","url":"https://dealroom.so/glossary/liquid-guarantor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"applicant","term":"Applicant","group":"People and paperwork","definition":"This is the business or individual applying for the SBA 7(a) loan. It's you, the buyer, and the business you're acquiring.","url":"https://dealroom.so/glossary/applicant","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"loan-application-package","term":"Loan Application Package","group":"People and paperwork","definition":"This is the complete set of documents submitted to the lender for an SBA 7(a) loan. It includes financial statements, personal information, and the business plan.","url":"https://dealroom.so/glossary/loan-application-package","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"historical-financial-statements","url":"https://dealroom.so/glossary/historical-financial-statements"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"independent-operation","term":"Independent Operation","group":"Reading the business","definition":"This refers to a business that can operate without direct control or reliance on a larger parent company or external entity. For SBA loans, the business must be truly independent.","url":"https://dealroom.so/glossary/independent-operation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"de-minimis-condition","term":"De Minimis Condition","group":"The loan itself","definition":"This is a minor condition or issue that is considered insignificant and doesn't require further action by the lender or SBA. It's a \"too small to matter\" determination.","url":"https://dealroom.so/glossary/de-minimis-condition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"material-risk","url":"https://dealroom.so/glossary/material-risk"}]},{"slug":"material-risk","term":"Material Risk","group":"Reading the business","definition":"This is any risk significant enough to influence a reasonable person's decision about buying or lending to a business. It's a critical factor in due diligence.","url":"https://dealroom.so/glossary/material-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"collateral-risk","url":"https://dealroom.so/glossary/collateral-risk"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"absolute-assignment","term":"Absolute Assignment","group":"Doing the deal","definition":"This is a complete transfer of rights or ownership of an asset from one party to another. For SBA loans, it typically applies to life insurance policies.","url":"https://dealroom.so/glossary/absolute-assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"}]},{"slug":"loan-balance","term":"Loan Balance","group":"The loan itself","definition":"This is the outstanding amount of money you still owe on your loan at any given time. It decreases with each principal payment you make.","url":"https://dealroom.so/glossary/loan-balance","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"enforceability","term":"Enforceability","group":"Doing the deal","definition":"This refers to the legal validity of a contract or agreement, ensuring it can be upheld in court. It's crucial for all legal documents in a business acquisition.","url":"https://dealroom.so/glossary/enforceability","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"sba-loan","term":"SBA Loan","group":"The loan itself","definition":"A loan partially guaranteed by the Small Business Administration, reducing risk for lenders. This guarantee makes it easier for small businesses to get funding they might not otherwise qualify for.","url":"https://dealroom.so/glossary/sba-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"ineligible-for-sba-guaranty","term":"Ineligible for SBA Guaranty","group":"The loan itself","definition":"This means the SBA will not back the loan, making it a conventional loan or unfinanceable. If your deal is deemed ineligible, your financing falls apart.","url":"https://dealroom.so/glossary/ineligible-for-sba-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan","url":"https://dealroom.so/glossary/sba-loan"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"borrower-misrepresentation","url":"https://dealroom.so/glossary/borrower-misrepresentation"}]},{"slug":"annual-percentage-rate","term":"Annual Percentage Rate","aka":"APR","group":"The loan itself","definition":"The total cost of borrowing money over a year, expressed as a percentage. It includes the interest rate plus certain other fees, giving you a clearer picture of the true cost.","url":"https://dealroom.so/glossary/annual-percentage-rate","official_sources":[],"related":[{"slug":"finance-charge","url":"https://dealroom.so/glossary/finance-charge"},{"slug":"total-cost-of-credit","url":"https://dealroom.so/glossary/total-cost-of-credit"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"finance-charge","term":"Finance Charge","group":"The loan itself","definition":"The total dollar amount you pay to use credit. This includes interest and other fees, representing the full monetary cost of your loan.","url":"https://dealroom.so/glossary/finance-charge","official_sources":[],"related":[{"slug":"annual-percentage-rate","url":"https://dealroom.so/glossary/annual-percentage-rate"},{"slug":"total-cost-of-credit","url":"https://dealroom.so/glossary/total-cost-of-credit"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"truth-in-lending-act","term":"Truth in Lending Act","aka":"TILA","group":"People and paperwork","definition":"A federal law requiring lenders to disclose loan terms and costs clearly. This ensures you receive consistent, transparent information to compare loan offers.","url":"https://dealroom.so/glossary/truth-in-lending-act","official_sources":[],"related":[{"slug":"annual-percentage-rate","url":"https://dealroom.so/glossary/annual-percentage-rate"},{"slug":"finance-charge","url":"https://dealroom.so/glossary/finance-charge"},{"slug":"total-cost-of-credit","url":"https://dealroom.so/glossary/total-cost-of-credit"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"total-cost-of-credit","term":"Total Cost of Credit","group":"The loan itself","definition":"The complete financial expense of taking out a loan, encompassing all interest, fees, and charges over the loan's life. This is the bottom-line dollar figure for your borrowing.","url":"https://dealroom.so/glossary/total-cost-of-credit","official_sources":[],"related":[{"slug":"annual-percentage-rate","url":"https://dealroom.so/glossary/annual-percentage-rate"},{"slug":"finance-charge","url":"https://dealroom.so/glossary/finance-charge"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"export-loan","term":"Export Loan","group":"The loan itself","definition":"An SBA loan program designed for businesses that export goods or services or need working capital to support export sales. It helps US businesses compete globally.","url":"https://dealroom.so/glossary/export-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan","url":"https://dealroom.so/glossary/sba-loan"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"disaster-relief-loan","term":"Disaster Relief Loan","group":"The loan itself","definition":"Loans provided by the SBA to help businesses and homeowners recover from declared disasters. These are distinct from business acquisition loans.","url":"https://dealroom.so/glossary/disaster-relief-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan","url":"https://dealroom.so/glossary/sba-loan"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"over-collateralization","term":"Over-Collateralization","group":"The loan itself","definition":"When the total value of assets pledged as collateral for a loan significantly exceeds the loan amount. This reduces lender risk but ties up more of the borrower's assets.","url":"https://dealroom.so/glossary/over-collateralization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"request-for-additional-information","term":"Request for Additional Information","aka":"RFAI","group":"People and paperwork","definition":"A formal request from the SBA or a lender for more details or documents during the loan application or review process. Respond promptly to keep your deal moving.","url":"https://dealroom.so/glossary/request-for-additional-information","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"extraordinary-legal-fee","term":"Extraordinary Legal Fee","group":"Doing the deal","definition":"Legal costs that go beyond typical transaction expenses due to unexpected complexities or disputes. These can significantly inflate your deal's closing costs.","url":"https://dealroom.so/glossary/extraordinary-legal-fee","official_sources":[],"related":[{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"borrower-misrepresentation","term":"Borrower Misrepresentation","group":"People and paperwork","definition":"Providing false or misleading information to the lender or SBA. This is a serious offense that can lead to loan denial, default, or even fraud charges.","url":"https://dealroom.so/glossary/borrower-misrepresentation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"}]},{"slug":"undisclosed-affiliation","term":"Undisclosed Affiliation","group":"People and paperwork","definition":"Failing to disclose a relationship between you, the business, or other entities that could impact SBA size standards or eligibility. This can invalidate your loan.","url":"https://dealroom.so/glossary/undisclosed-affiliation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"ineligible-for-sba-guaranty","url":"https://dealroom.so/glossary/ineligible-for-sba-guaranty"}]},{"slug":"ineligible-use-of-proceeds","term":"Ineligible Use of Proceeds","group":"The loan itself","definition":"Using SBA loan funds for purposes not permitted by SBA rules. This can lead to the SBA denying its guaranty or even requiring immediate loan repayment.","url":"https://dealroom.so/glossary/ineligible-use-of-proceeds","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"ineligible-for-sba-guaranty","url":"https://dealroom.so/glossary/ineligible-for-sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"ineligibility-at-origination","term":"Ineligibility at Origination","group":"The loan itself","definition":"This means the business or borrower didn't meet SBA's rules when the loan was first approved. If discovered later, the SBA can deny its guaranty, leaving the lender and you on the hook.","url":"https://dealroom.so/glossary/ineligibility-at-origination","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-bar","url":"https://dealroom.so/glossary/eligibility-bar"},{"slug":"sba-loan-default","url":"https://dealroom.so/glossary/sba-loan-default"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"inadequate-collateral-coverage","term":"Inadequate Collateral Coverage","group":"Reading the business","definition":"This occurs when the value of the assets pledged to secure the loan is less than the loan amount, leaving a gap. It means there isn't enough physical security for the lender.","url":"https://dealroom.so/glossary/inadequate-collateral-coverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral-deficiency","url":"https://dealroom.so/glossary/collateral-deficiency"},{"slug":"fully-collateralized","url":"https://dealroom.so/glossary/fully-collateralized"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"high-risk-borrower","term":"High-Risk Borrower","group":"People and paperwork","definition":"An individual or business identified by the lender as having a higher probability of defaulting on a loan, often due to poor credit, limited experience, or weak financial history. This can make obtaining an SBA loan harder.","url":"https://dealroom.so/glossary/high-risk-borrower","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"financial-responsibility","url":"https://dealroom.so/glossary/financial-responsibility"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"fully-collateralized","term":"Fully Collateralized","group":"The loan itself","definition":"This means the value of the assets pledged as security for the loan equals or exceeds the total loan amount. It offers the lender maximum protection if the borrower defaults.","url":"https://dealroom.so/glossary/fully-collateralized","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"inadequate-collateral-coverage","url":"https://dealroom.so/glossary/inadequate-collateral-coverage"},{"slug":"collateral-deficiency","url":"https://dealroom.so/glossary/collateral-deficiency"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"collateral-deficiency","term":"Collateral Deficiency","group":"Reading the business","definition":"This is the gap that exists when the liquidation value of the business assets used as collateral is less than the loan amount. It’s the opposite of being fully collateralized.","url":"https://dealroom.so/glossary/collateral-deficiency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"inadequate-collateral-coverage","url":"https://dealroom.so/glossary/inadequate-collateral-coverage"},{"slug":"fully-collateralized","url":"https://dealroom.so/glossary/fully-collateralized"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"delinquent-federal-debt","term":"Delinquent Federal Debt","group":"People and paperwork","definition":"This refers to unpaid debts owed to the U.S. government, such as back taxes, student loans, or prior SBA loans. It makes you ineligible for a new SBA loan.","url":"https://dealroom.so/glossary/delinquent-federal-debt","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-bar","url":"https://dealroom.so/glossary/eligibility-bar"},{"slug":"financial-responsibility","url":"https://dealroom.so/glossary/financial-responsibility"},{"slug":"ineligibility-at-origination","url":"https://dealroom.so/glossary/ineligibility-at-origination"},{"slug":"sba-loan-default","url":"https://dealroom.so/glossary/sba-loan-default"}]},{"slug":"financial-responsibility","term":"Financial Responsibility","group":"People and paperwork","definition":"This refers to your ability and willingness to manage your finances and repay debts. Lenders assess this through your credit history, personal financial statements, and tax returns.","url":"https://dealroom.so/glossary/financial-responsibility","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"high-risk-borrower","url":"https://dealroom.so/glossary/high-risk-borrower"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"sba-loan-default","term":"SBA Loan Default","group":"The loan itself","definition":"This occurs when a borrower fails to make required payments on an SBA-backed loan. It triggers significant consequences for the borrower and the lender, including potential asset liquidation.","url":"https://dealroom.so/glossary/sba-loan-default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"eligibility-bar","term":"Eligibility Bar","group":"The loan itself","definition":"This is a specific condition or characteristic that makes a borrower or business definitively ineligible for an SBA loan. It's a hard stop in the application process.","url":"https://dealroom.so/glossary/eligibility-bar","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligibility-at-origination","url":"https://dealroom.so/glossary/ineligibility-at-origination"},{"slug":"delinquent-federal-debt","url":"https://dealroom.so/glossary/delinquent-federal-debt"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"loc-agreement","term":"LOC Agreement","aka":"Line of Credit Agreement","group":"The loan itself","definition":"This is a contract outlining the terms and conditions for a line of credit, allowing a business to draw funds up to a maximum amount, repay them, and redraw again. It's for working capital, not acquisition.","url":"https://dealroom.so/glossary/loc-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"owner-s-capital-contribution","term":"Owner's Capital Contribution","group":"Your money in the deal","definition":"This is the cash or eligible assets you, as the buyer, put into the deal. It's your equity injection, demonstrating your commitment and reducing the overall loan amount.","url":"https://dealroom.so/glossary/owner-s-capital-contribution","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"irrevocable-contribution","url":"https://dealroom.so/glossary/irrevocable-contribution"},{"slug":"tangible-capital-contribution","url":"https://dealroom.so/glossary/tangible-capital-contribution"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"future-cash-flow","term":"Future Cash Flow","group":"Reading the business","definition":"This refers to the projected cash a business is expected to generate after all expenses and debt payments. It's crucial for assessing the business's ability to repay the SBA loan.","url":"https://dealroom.so/glossary/future-cash-flow","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"irrevocable-contribution","term":"Irrevocable contribution","group":"Your money in the deal","definition":"This means your capital contribution is permanently committed to the business and cannot be withdrawn. It assures the lender your equity is truly \"at risk.\"","url":"https://dealroom.so/glossary/irrevocable-contribution","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-s-capital-contribution","url":"https://dealroom.so/glossary/owner-s-capital-contribution"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"tangible-capital-contribution","url":"https://dealroom.so/glossary/tangible-capital-contribution"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"tangible-capital-contribution","term":"Tangible capital contribution","group":"Your money in the deal","definition":"This refers to your equity injection that consists of actual cash or hard assets with verifiable value, not goodwill or intangible assets. It's the most straightforward form of equity.","url":"https://dealroom.so/glossary/tangible-capital-contribution","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-s-capital-contribution","url":"https://dealroom.so/glossary/owner-s-capital-contribution"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"irrevocable-contribution","url":"https://dealroom.so/glossary/irrevocable-contribution"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"debt-service-coverage-ratio-waiver","term":"Debt service coverage ratio waiver","group":"The loan itself","definition":"A waiver allows a lender to approve a loan even if the business's projected cash flow doesn't meet the typical minimum Debt Service Coverage Ratio (DSCR). This matters because it can make a deal financeable that otherwise wouldn't be.","url":"https://dealroom.so/glossary/debt-service-coverage-ratio-waiver","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"sba-7-a-loan-program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"}]},{"slug":"sba-7-a-loan-program","term":"SBA 7(a) Loan Program","group":"The loan itself","definition":"This is the primary loan program the Small Business Administration (SBA) offers, providing government-backed loans for small businesses. It's crucial because it's the most common way to finance the acquisition of an existing small business.","url":"https://dealroom.so/glossary/sba-7-a-loan-program","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"additional-spread","term":"Additional spread","group":"The loan itself","definition":"This is an extra percentage added to the base interest rate (like WSJ Prime or Term SOFR) that a lender charges on an SBA loan. It directly impacts your monthly debt service, so a higher spread means higher payments.","url":"https://dealroom.so/glossary/additional-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"}]},{"slug":"credit-review","term":"Credit review","group":"Reading the business","definition":"This is a lender's process of evaluating both your personal creditworthiness and the target business's financial health. It determines if you and the business are likely to repay the loan, which is essential for loan approval.","url":"https://dealroom.so/glossary/credit-review","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"historical-financial-data","url":"https://dealroom.so/glossary/historical-financial-data"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"useful-life-of-assets","term":"Useful life of assets","group":"Reading the business","definition":"This refers to the estimated period an asset is expected to be economically productive for the business. It's important because the loan term for fixed assets generally cannot exceed their useful life, impacting your repayment schedule.","url":"https://dealroom.so/glossary/useful-life-of-assets","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"depreciation","url":"https://dealroom.so/glossary/depreciation"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"historical-financial-data","term":"Historical financial data","group":"Reading the business","definition":"This includes past Profit and Loss Statements, Balance Sheets, and tax returns that show how the business has performed financially. 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It's required for all owners with 20% or more equity.","url":"https://dealroom.so/glossary/personal-history-statement","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"enforceable-lien","term":"Enforceable lien","group":"Doing the deal","definition":"This is a legal claim against an asset, ensuring the lender can seize it if you default on the loan. It's crucial because the SBA requires its lenders to secure their loans with a first lien position on business assets whenever possible.","url":"https://dealroom.so/glossary/enforceable-lien","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"depreciation","term":"Depreciation","group":"Reading the business","definition":"This is an accounting method that spreads the cost of a tangible asset over its useful life, reducing its book value over time. It's a non-cash expense that impacts reported profits but not the actual cash flow of the business.","url":"https://dealroom.so/glossary/depreciation","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"useful-life-of-assets","url":"https://dealroom.so/glossary/useful-life-of-assets"}]},{"slug":"title-work","term":"Title work","group":"Doing the deal","definition":"This refers to the process of examining public records to ensure that the seller has clear, marketable ownership of any real estate involved in the deal. It's essential to confirm you'll receive undisputed ownership.","url":"https://dealroom.so/glossary/title-work","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"enforceable-lien","url":"https://dealroom.so/glossary/enforceable-lien"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"repair-of-the-guarantee","term":"Repair of the guarantee","group":"The loan itself","definition":"This is when the SBA reduces or denies its guaranty to a lender due to lender errors, non-compliance, or fraud. It's critical for buyers because a lender facing a repair might be less flexible or pursue more aggressive collection if you default.","url":"https://dealroom.so/glossary/repair-of-the-guarantee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"permanent-capital","term":"Permanent capital","group":"Your money in the deal","definition":"This refers to capital that is not expected to be repaid, typically your equity injection (down payment) in the business. It's critical because the SBA requires a minimum amount of your own permanent capital in the deal.","url":"https://dealroom.so/glossary/permanent-capital","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"down-payment","url":"https://dealroom.so/glossary/down-payment"}]},{"slug":"ineligible-business-type","term":"Ineligible business type","group":"The loan itself","definition":"These are specific types of businesses that the SBA will not provide loan guarantees for, regardless of their financial performance. Knowing this upfront is vital to avoid wasting time on unfinanceable deals.","url":"https://dealroom.so/glossary/ineligible-business-type","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"multi-level-marketing-scheme","url":"https://dealroom.so/glossary/multi-level-marketing-scheme"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"multi-level-marketing-scheme","term":"Multi-level marketing scheme","group":"The loan itself","definition":"This is a business model where participants earn money from both direct sales and recruiting new distributors. It's an ineligible business type for SBA loans because it often resembles a pyramid scheme and lacks a sustainable primary revenue source.","url":"https://dealroom.so/glossary/multi-level-marketing-scheme","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-business-type","url":"https://dealroom.so/glossary/ineligible-business-type"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"sba-7-a-loan-program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"}]},{"slug":"negative-eligibility-list","term":"Negative eligibility list","group":"The loan itself","definition":"This is a list of business types that the SBA will not provide loans for, such as those involved in speculation, gambling, or lending. You care because if your target business is on this list, an SBA 7(a) loan is off the table.","url":"https://dealroom.so/glossary/negative-eligibility-list","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"industry-code","url":"https://dealroom.so/glossary/industry-code"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"closing-document","term":"Closing document","group":"Doing the deal","definition":"These are all the legal agreements and forms you sign at the very end of the deal to finalize the business acquisition and your SBA loan. You care because these documents define your obligations, rights, and the terms of your financing.","url":"https://dealroom.so/glossary/closing-document","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"pre-disbursement-condition","term":"Pre-disbursement condition","group":"The loan itself","definition":"These are specific requirements the lender sets that you must fulfill before they will release the loan funds. You care because failing to meet any condition can delay or even cancel your loan disbursement and thus the entire deal.","url":"https://dealroom.so/glossary/pre-disbursement-condition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"closing-document","url":"https://dealroom.so/glossary/closing-document"}]},{"slug":"industry-code","term":"Industry code","aka":"NAICS code","group":"Reading the business","definition":"This is a standardized numerical code (like a NAICS code) that classifies a business's primary economic activity. You care because it determines if the business is eligible for an SBA loan and meets size standards.","url":"https://dealroom.so/glossary/industry-code","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"negative-eligibility-list","url":"https://dealroom.so/glossary/negative-eligibility-list"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"}]},{"slug":"jointly-owned-asset","term":"Jointly-owned asset","group":"People and paperwork","definition":"This refers to property or assets that are legally owned by two or more individuals, commonly spouses. You care because if a key principal's spouse jointly owns significant assets, those assets might be considered for collateral or require the spouse to sign personal guarantees.","url":"https://dealroom.so/glossary/jointly-owned-asset","official_sources":[],"related":[{"slug":"marital-property-law","url":"https://dealroom.so/glossary/marital-property-law"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"marital-property-law","term":"Marital property law","group":"People and paperwork","definition":"These are state-specific laws that govern how assets and debts acquired during a marriage are owned and divided between spouses. You care because these laws impact what assets can be pledged as collateral and the necessity of spousal guarantees for your loan.","url":"https://dealroom.so/glossary/marital-property-law","official_sources":[],"related":[{"slug":"jointly-owned-asset","url":"https://dealroom.so/glossary/jointly-owned-asset"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"land-acquisition","term":"Land acquisition","group":"Doing the deal","definition":"This refers to the purchase of undeveloped or developed land. You care if the business acquisition involves buying the real estate where the business operates, or land for future expansion.","url":"https://dealroom.so/glossary/land-acquisition","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"business-mortgage","url":"https://dealroom.so/glossary/business-mortgage"}]},{"slug":"annual-financial-statement","term":"Annual financial statement","group":"Reading the business","definition":"This is a formal summary of a business's financial performance and position over a fiscal year, usually including a Profit and Loss Statement and a Balance Sheet. You care because these are critical documents for understanding the business's historical profitability and financial health.","url":"https://dealroom.so/glossary/annual-financial-statement","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"technical-default","term":"Technical default","group":"The loan itself","definition":"This occurs when a borrower violates a non-payment term or condition of their loan agreement, even if all payments are current. You care because a technical default can trigger lender action, including accelerating the loan, if not remedied.","url":"https://dealroom.so/glossary/technical-default","official_sources":[],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"unencumbered-real-estate","term":"Unencumbered real estate","group":"Your money in the deal","definition":"This is real estate you own that is free of any existing liens, mortgages, or other claims. You care because it represents a clean asset that can be used as additional collateral for your SBA loan or potentially converted to cash for your equity injection.","url":"https://dealroom.so/glossary/unencumbered-real-estate","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"working-capital-budget","term":"Working capital budget","group":"Reading the business","definition":"This is a detailed projection of the cash flow needed to cover the business's short-term operating expenses, assets, and liabilities. You care because it ensures the business has sufficient cash on hand to operate smoothly immediately after the acquisition.","url":"https://dealroom.so/glossary/working-capital-budget","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"business-mortgage","term":"Business mortgage","group":"The loan itself","definition":"This is a specific type of loan used to purchase or refinance commercial real estate for a business. You care if the business you're buying includes the property it operates from.","url":"https://dealroom.so/glossary/business-mortgage","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"land-acquisition","url":"https://dealroom.so/glossary/land-acquisition"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"all-appropriate-inquiries","term":"All appropriate inquiries","group":"Reading the business","definition":"This refers to the due diligence standard required for environmental site assessments to qualify for certain liability protections under federal law. You care because it helps you avoid inheriting costly environmental problems with the business's real estate.","url":"https://dealroom.so/glossary/all-appropriate-inquiries","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"illiquid-asset","term":"Illiquid asset","group":"Reading the business","definition":"This is an asset that cannot be easily or quickly converted into cash without a substantial loss in value. You care because these assets don't contribute to immediate cash flow and can't readily cover unexpected expenses or loan payments.","url":"https://dealroom.so/glossary/illiquid-asset","official_sources":[],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"private-equity-holding","term":"Private equity holding","group":"Your money in the deal","definition":"This is an investment in a private company, not publicly traded. For your SBA loan, you usually can't use these funds as your equity injection unless they are easily convertible to cash without restrictions.","url":"https://dealroom.so/glossary/private-equity-holding","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"restricted-stock","term":"Restricted stock","group":"Your money in the deal","definition":"This is company stock that you can't sell or transfer for a specific period or until certain conditions are met. Lenders won't count restricted stock towards your required cash injection.","url":"https://dealroom.so/glossary/restricted-stock","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"private-equity-holding","url":"https://dealroom.so/glossary/private-equity-holding"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"no-lien-affidavit","term":"No-lien affidavit","aka":"Affidavit of No Lien","group":"Doing the deal","definition":"This is a sworn statement confirming that no one has a lien or claim against a specific asset or property. Buyers use this to ensure they're acquiring assets free and clear.","url":"https://dealroom.so/glossary/no-lien-affidavit","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"undisclosed-affiliate","term":"Undisclosed affiliate","group":"People and paperwork","definition":"This refers to a person or business with a relationship (ownership, management, or family) to the borrower or seller that was not disclosed to the SBA or lender. Failure to disclose can lead to serious problems.","url":"https://dealroom.so/glossary/undisclosed-affiliate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"seller-s-lien","term":"Seller's lien","group":"Doing the deal","definition":"This is a legal claim by the seller on the assets of the business you're buying, typically securing a seller note. It gives the seller the right to repossess assets if you default on that note.","url":"https://dealroom.so/glossary/seller-s-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"effective-interest-rate","term":"Effective interest rate","aka":"Annual Percentage Rate (APR)","group":"The loan itself","definition":"This is the actual annual interest rate paid on a loan or investment, taking into account compounding and all fees. It gives you the true cost of borrowing.","url":"https://dealroom.so/glossary/effective-interest-rate","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"}]},{"slug":"guaranty-enforceability","term":"Guaranty enforceability","group":"People and paperwork","definition":"This refers to the legal validity and ability to collect on a personal guaranty signed by you or other key principals. Lenders ensure this is solid to protect their loan.","url":"https://dealroom.so/glossary/guaranty-enforceability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"adequate-consideration","term":"Adequate consideration","group":"Doing the deal","definition":"This means there's a fair and reasonable exchange of value in a contract or transaction. It's crucial for ensuring the legality and enforceability of agreements.","url":"https://dealroom.so/glossary/adequate-consideration","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"net-proceeds","term":"Net proceeds","group":"Doing the deal","definition":"This is the total cash a seller receives from a sale after all expenses, fees, and outstanding debts have been paid. It's the bottom-line amount the seller walks away with.","url":"https://dealroom.so/glossary/net-proceeds","official_sources":[],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"transferability","term":"Transferability","group":"Doing the deal","definition":"This refers to the ability to legally transfer ownership of assets, contracts, or liabilities from the seller to you. It's a key due diligence item in any acquisition.","url":"https://dealroom.so/glossary/transferability","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"delinquent","term":"Delinquent","group":"The loan itself","definition":"A loan is delinquent when a borrower misses a scheduled payment by a certain number of days, usually 30 or more. This is a serious red flag for lenders and can lead to default.","url":"https://dealroom.so/glossary/delinquent","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"prudent-servicing-practice","term":"Prudent servicing practice","group":"The loan itself","definition":"This refers to the reasonable and responsible actions a lender takes to manage and collect on a loan, protecting both their and the SBA's interests.","url":"https://dealroom.so/glossary/prudent-servicing-practice","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"non-owner-spouse","term":"Non-owner spouse","group":"People and paperwork","definition":"This is the spouse of a business owner or key principal who doesn't have an ownership stake in the business but may still need to sign a guaranty.","url":"https://dealroom.so/glossary/non-owner-spouse","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"guaranty-enforceability","url":"https://dealroom.so/glossary/guaranty-enforceability"}]},{"slug":"sba-form-148","term":"SBA Form 148","aka":"Standby Agreement","group":"People and paperwork","definition":"This is the SBA form for the Standby Agreement. It's used when there's a seller note or other debt owed by the business to an associate or owner, requiring it to be subordinated.","url":"https://dealroom.so/glossary/sba-form-148","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"rebuttable-presumption","term":"Rebuttable presumption","group":"People and paperwork","definition":"A legal assumption that stands true unless someone proves otherwise. For a buyer, this often means you're assumed to be in good standing until something disproves it.","url":"https://dealroom.so/glossary/rebuttable-presumption","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"cogs","term":"COGS","group":"Reading the business","definition":"The direct costs to produce the goods a business sells. Buyers care because it directly impacts gross profit and the business's efficiency.","url":"https://dealroom.so/glossary/cogs","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"assignment-of-policy-rights","term":"Assignment of policy rights","group":"Doing the deal","definition":"This is when a policyholder transfers their rights in a life insurance policy to a lender as collateral. For an SBA loan, it secures the loan against the death of a key person.","url":"https://dealroom.so/glossary/assignment-of-policy-rights","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"}]},{"slug":"unconditional-assignment","term":"Unconditional assignment","group":"Doing the deal","definition":"A complete and irreversible transfer of rights from one party to another, without any conditions or reservations. In SBA loans, this refers to the assignment of life insurance policy rights.","url":"https://dealroom.so/glossary/unconditional-assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"assignment-of-policy-rights","url":"https://dealroom.so/glossary/assignment-of-policy-rights"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"sole-assignee","term":"Sole assignee","group":"People and paperwork","definition":"The only party to whom rights or property have been transferred. For an SBA loan, the lender must be the sole assignee of any required life insurance policy.","url":"https://dealroom.so/glossary/sole-assignee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"assignment-of-policy-rights","url":"https://dealroom.so/glossary/assignment-of-policy-rights"},{"slug":"unconditional-assignment","url":"https://dealroom.so/glossary/unconditional-assignment"},{"slug":"beneficiary","url":"https://dealroom.so/glossary/beneficiary"}]},{"slug":"policy-lapse","term":"Policy lapse","group":"The loan itself","definition":"This occurs when an insurance policy terminates due to unpaid premiums. If your required life insurance policy lapses, it violates your SBA loan agreement.","url":"https://dealroom.so/glossary/policy-lapse","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"automatic-termination","term":"Automatic termination","group":"Doing the deal","definition":"A predefined event or condition that causes a contract or agreement to end without further action from either party. This impacts how certain agreements, like standby notes, conclude.","url":"https://dealroom.so/glossary/automatic-termination","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"loss-exposure","term":"Loss exposure","group":"The loan itself","definition":"The potential financial risk or maximum amount of loss a lender faces if a borrower defaults. The SBA evaluates this for every loan.","url":"https://dealroom.so/glossary/loss-exposure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"non-owner-guarantor","term":"Non-owner guarantor","group":"People and paperwork","definition":"An individual who guarantees an SBA loan but does not own 20% or more of the business. This person is still personally liable for the loan.","url":"https://dealroom.so/glossary/non-owner-guarantor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"finance-company","term":"Finance company","group":"People and paperwork","definition":"An institution that provides loans or financing, often specializing in specific types of credit or industries, distinct from traditional banks.","url":"https://dealroom.so/glossary/finance-company","official_sources":[],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"}]},{"slug":"lease-financing-company","term":"Lease financing company","group":"People and paperwork","definition":"A company that provides funding for businesses to lease equipment or other assets, rather than purchasing them outright.","url":"https://dealroom.so/glossary/lease-financing-company","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"blanket-ucc-filing","term":"Blanket UCC filing","group":"Doing the deal","definition":"A lien filed under the Uniform Commercial Code (UCC) that covers all or nearly all of a borrower's business assets as collateral. It gives the lender broad security.","url":"https://dealroom.so/glossary/blanket-ucc-filing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"uniform-commercial-code","url":"https://dealroom.so/glossary/uniform-commercial-code"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"fully-subordinated","term":"Fully subordinated","group":"Doing the deal","definition":"Describes debt where the lender agrees to be repaid only after other specified debts, like the SBA loan, are fully satisfied. This reduces risk for the primary lender.","url":"https://dealroom.so/glossary/fully-subordinated","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"alternative-base-rate","term":"Alternative base rate","group":"The loan itself","definition":"An interest rate benchmark used by lenders that is not the standard Wall Street Journal Prime Rate or Term SOFR. It's less common for SBA 7(a) loans.","url":"https://dealroom.so/glossary/alternative-base-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"base-rate","url":"https://dealroom.so/glossary/base-rate"}]},{"slug":"all-in-rate","term":"All-in rate","group":"The loan itself","definition":"This is the total interest rate you pay on your SBA loan, combining the base rate (like WSJ Prime) and the lender's spread. It's crucial for calculating your actual monthly payments and overall loan cost.","url":"https://dealroom.so/glossary/all-in-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"arm-s-length-terms","term":"Arm's-length terms","group":"Doing the deal","definition":"This means a transaction or agreement is conducted as if between unrelated, independent parties, ensuring fair market value and no hidden benefits for one side. SBA requires this for many deal elements to prevent conflicts of interest.","url":"https://dealroom.so/glossary/arm-s-length-terms","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"self-dealing","url":"https://dealroom.so/glossary/self-dealing"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"market-rent-analysis","url":"https://dealroom.so/glossary/market-rent-analysis"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"market-rent-analysis","term":"Market rent analysis","group":"Reading the business","definition":"This is an evaluation to determine the fair rental value of a property, often performed for real estate involved in a business acquisition. It helps verify if the current rent is reasonable and sustainable for the business.","url":"https://dealroom.so/glossary/market-rent-analysis","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"}]},{"slug":"self-dealing","term":"Self-dealing","group":"People and paperwork","definition":"This occurs when someone in a position of trust acts in their own best interest rather than the interest of another party, like a seller structuring terms to benefit themselves unfairly. The SBA strictly prohibits this in loan transactions.","url":"https://dealroom.so/glossary/self-dealing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arm-s-length-terms","url":"https://dealroom.so/glossary/arm-s-length-terms"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"loan-performance","term":"Loan performance","group":"The loan itself","definition":"This refers to how well a borrower is meeting their loan repayment obligations. For an SBA loan, good performance means making timely payments according to the agreed-upon terms, avoiding default.","url":"https://dealroom.so/glossary/loan-performance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"performing-status","url":"https://dealroom.so/glossary/performing-status"},{"slug":"default-rate","url":"https://dealroom.so/glossary/default-rate"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"restructuring-of-payments","url":"https://dealroom.so/glossary/restructuring-of-payments"}]},{"slug":"post-closing-event","term":"Post-closing event","group":"Doing the deal","definition":"This is any action or condition that occurs after the loan closing date but is still related to the transaction, often requiring specific follow-up. It could be a required filing, a final payment, or a condition that must be met.","url":"https://dealroom.so/glossary/post-closing-event","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"post-disbursement-verification","url":"https://dealroom.so/glossary/post-disbursement-verification"}]},{"slug":"post-disbursement-verification","term":"Post-disbursement verification","group":"The loan itself","definition":"This is the process where the lender confirms that loan funds were used for their approved purpose after they've been paid out. The SBA requires this to prevent misuse of loan proceeds.","url":"https://dealroom.so/glossary/post-disbursement-verification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"}]},{"slug":"forensic-review","term":"Forensic review","group":"Reading the business","definition":"This is a detailed, investigative examination of financial records to uncover discrepancies, fraud, or misrepresentation. A buyer might commission one during due diligence if red flags appear in the seller's financials.","url":"https://dealroom.so/glossary/forensic-review","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"}]},{"slug":"lump-sum-disbursement","term":"Lump sum disbursement","group":"The loan itself","definition":"This means the entire loan amount is paid out to the borrower or seller in a single payment, rather than in installments. Most SBA 7(a) acquisition loans are disbursed this way.","url":"https://dealroom.so/glossary/lump-sum-disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"restructuring-of-payments","term":"Restructuring of payments","group":"The loan itself","definition":"This involves changing the original terms of a loan's repayment schedule, often to help a borrower facing financial hardship avoid default. It could mean adjusting payment amounts or extending the loan term.","url":"https://dealroom.so/glossary/restructuring-of-payments","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"performing-status","term":"Performing status","group":"The loan itself","definition":"A loan is in \"performing status\" when the borrower is making all required principal and interest payments on time and according to the loan agreement. This is the desired state for any loan.","url":"https://dealroom.so/glossary/performing-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-performance","url":"https://dealroom.so/glossary/loan-performance"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"default-rate","url":"https://dealroom.so/glossary/default-rate"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"default-rate","term":"Default rate","group":"The loan itself","definition":"This is a higher interest rate that a lender can impose on a loan once it enters default, as specified in the loan agreement. It's a penalty for failing to meet repayment obligations.","url":"https://dealroom.so/glossary/default-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"all-in-rate","url":"https://dealroom.so/glossary/all-in-rate"},{"slug":"loan-performance","url":"https://dealroom.so/glossary/loan-performance"},{"slug":"restructuring-of-payments","url":"https://dealroom.so/glossary/restructuring-of-payments"}]},{"slug":"portfolio-analysis","term":"Portfolio analysis","group":"Reading the business","definition":"This is a detailed review of a collection of assets or investments to assess their performance, risk, and suitability. For a business buyer, it might involve evaluating a group of contracts or customer accounts.","url":"https://dealroom.so/glossary/portfolio-analysis","official_sources":[],"related":[{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"underwriting-standard","term":"Underwriting standard","group":"The loan itself","definition":"These are the specific criteria and policies a lender uses to evaluate a loan applicant's creditworthiness and the viability of the business. Meeting these standards is essential for loan approval.","url":"https://dealroom.so/glossary/underwriting-standard","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"closing-procedure","term":"Closing procedure","group":"Doing the deal","definition":"The final steps to legally transfer ownership and fund the transaction, ensuring all conditions from the purchase agreement are met. Buyers need to understand this process to anticipate tasks and deadlines.","url":"https://dealroom.so/glossary/closing-procedure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"partial-buyout","term":"Partial buyout","group":"Doing the deal","definition":"A transaction where you purchase only a portion of a business, often alongside other owners. This means you won't own 100% and will share control and profits.","url":"https://dealroom.so/glossary/partial-buyout","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"passive-minority-owner","term":"Passive minority owner","group":"People and paperwork","definition":"Someone who owns a small percentage of a business but doesn't actively participate in its operations. For an SBA loan, their role is typically limited to an investment.","url":"https://dealroom.so/glossary/passive-minority-owner","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"partial-buyout","url":"https://dealroom.so/glossary/partial-buyout"}]},{"slug":"silent-partner","term":"Silent partner","group":"People and paperwork","definition":"An investor in a business who shares in profits or losses but does not take an active role in management. They typically provide capital without operational input.","url":"https://dealroom.so/glossary/silent-partner","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"passive-minority-owner","url":"https://dealroom.so/glossary/passive-minority-owner"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"approved-lender","term":"Approved lender","group":"People and paperwork","definition":"A financial institution authorized by the SBA to originate, underwrite, and service 7(a) loans. These are the only banks that can make SBA-guaranteed loans.","url":"https://dealroom.so/glossary/approved-lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"administrative-expense","term":"Administrative expense","aka":"SG&A","group":"Reading the business","definition":"Costs incurred by a business that are not directly related to producing goods or services, such as office rent, salaries for support staff, and legal fees. These are overhead costs.","url":"https://dealroom.so/glossary/administrative-expense","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"owner-occupancy-requirement","term":"Owner-occupancy requirement","group":"The loan itself","definition":"An SBA rule requiring that the buyer, as the new owner, actively manage and operate the business financed by the 7(a) loan. This prevents passive investments.","url":"https://dealroom.so/glossary/owner-occupancy-requirement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"passive-minority-owner","url":"https://dealroom.so/glossary/passive-minority-owner"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"unconditional-personal-guarantee","term":"Unconditional personal guarantee","aka":"Full personal guarantee","group":"People and paperwork","definition":"A binding promise by an individual to repay a business loan if the business defaults, without any conditions or limitations. The SBA requires this from all 20%+ owners.","url":"https://dealroom.so/glossary/unconditional-personal-guarantee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"individually-liable","url":"https://dealroom.so/glossary/individually-liable"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"individually-liable","term":"Individually liable","group":"People and paperwork","definition":"A legal status where an individual is personally responsible for a debt or obligation, regardless of the business's legal structure. This means your personal assets are at risk.","url":"https://dealroom.so/glossary/individually-liable","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"unconditional-personal-guarantee","url":"https://dealroom.so/glossary/unconditional-personal-guarantee"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"articles-of-incorporation","term":"Articles of incorporation","aka":"Certificate of Incorporation","group":"People and paperwork","definition":"A legal document filed with the state to officially create a corporation. It establishes the corporation's existence, name, and initial structure.","url":"https://dealroom.so/glossary/articles-of-incorporation","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"articles-of-organization","url":"https://dealroom.so/glossary/articles-of-organization"},{"slug":"business-license","url":"https://dealroom.so/glossary/business-license"}]},{"slug":"articles-of-organization","term":"Articles of organization","aka":"Certificate of Organization","group":"People and paperwork","definition":"A legal document filed with the state to officially form a Limited Liability Company (LLC). It outlines the basic information about the LLC.","url":"https://dealroom.so/glossary/articles-of-organization","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"articles-of-incorporation","url":"https://dealroom.so/glossary/articles-of-incorporation"},{"slug":"business-license","url":"https://dealroom.so/glossary/business-license"}]},{"slug":"business-license","term":"Business license","group":"People and paperwork","definition":"A permit issued by a government agency that allows a business to operate legally within a specific jurisdiction. It's mandatory for most businesses.","url":"https://dealroom.so/glossary/business-license","official_sources":[],"related":[{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"servicing-fee","term":"Servicing fee","group":"The loan itself","definition":"An ongoing fee paid by the SBA to the lender for managing the 7(a) loan throughout its term. This is typically a percentage of the outstanding balance.","url":"https://dealroom.so/glossary/servicing-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"distribution-to-owners","term":"Distribution to owners","aka":"Owner distributions","group":"Reading the business","definition":"Payments made from a business's profits or assets to its owners. These are not wages or salaries but a return on their investment.","url":"https://dealroom.so/glossary/distribution-to-owners","official_sources":[],"related":[{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"felony-indictment","term":"Felony indictment","group":"People and paperwork","definition":"A formal accusation by a grand jury that there is enough evidence to bring criminal charges against an individual for a serious crime. For a buyer, this is a major red flag for loan eligibility.","url":"https://dealroom.so/glossary/felony-indictment","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"criminal-information","url":"https://dealroom.so/glossary/criminal-information"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"criminal-information","term":"Criminal information","group":"People and paperwork","definition":"A formal accusation of a crime filed by a prosecutor without a grand jury indictment. Similar to a felony indictment, it poses a significant challenge to SBA loan eligibility.","url":"https://dealroom.so/glossary/criminal-information","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"felony-indictment","url":"https://dealroom.so/glossary/felony-indictment"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"legal-permanent-residency","term":"Legal permanent residency","group":"People and paperwork","definition":"The status of an individual who has been granted the right to live permanently in the U.S. and holds a Green Card (Form I-551). This status is key for non-citizens seeking an SBA loan.","url":"https://dealroom.so/glossary/legal-permanent-residency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"succession-planning","term":"Succession planning","group":"Reading the business","definition":"The process of identifying and developing internal people to fill key positions in the business when current staff leave. For a buyer, it reveals how reliant the business is on the current owner.","url":"https://dealroom.so/glossary/succession-planning","official_sources":[],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"owner-occupied-property","term":"Owner-occupied property","group":"The loan itself","definition":"Real estate where the business you are acquiring occupies at least 51% of the net rentable area. This is a critical requirement for using an SBA 7(a) loan to purchase real estate.","url":"https://dealroom.so/glossary/owner-occupied-property","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"north-american-industry-classification-system-code","term":"North American Industry Classification System code","aka":"NAICS code","group":"Reading the business","definition":"A standardized code used by federal agencies to classify business establishments by industry. This code determines if the business you're buying meets SBA size standards and eligibility rules.","url":"https://dealroom.so/glossary/north-american-industry-classification-system-code","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"collateral-liquidation","term":"Collateral liquidation","group":"Doing the deal","definition":"The process of selling off assets pledged as collateral to recover funds for a defaulted loan. It's the lender's final step if your business defaults on its SBA loan.","url":"https://dealroom.so/glossary/collateral-liquidation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"servicing-and-liquidation","url":"https://dealroom.so/glossary/servicing-and-liquidation"}]},{"slug":"commercial-lease-agreement","term":"Commercial lease agreement","group":"People and paperwork","definition":"A legally binding contract between a business tenant and a landlord for the rental of commercial property. This agreement is a key asset for the business and must be reviewed carefully during acquisition.","url":"https://dealroom.so/glossary/commercial-lease-agreement","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"totality-of-the-circumstances-test","term":"Totality of the circumstances test","group":"The loan itself","definition":"A comprehensive evaluation method used by the SBA to determine if a borrower has \"Good Character\" for a loan, considering all relevant facts. It's a broad look at your background.","url":"https://dealroom.so/glossary/totality-of-the-circumstances-test","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony-indictment","url":"https://dealroom.so/glossary/felony-indictment"},{"slug":"criminal-information","url":"https://dealroom.so/glossary/criminal-information"}]},{"slug":"sba-addendum","term":"SBA Addendum","group":"People and paperwork","definition":"A document attached to the loan agreement that outlines additional terms and conditions specific to SBA loans, often including specific covenants or reporting requirements.","url":"https://dealroom.so/glossary/sba-addendum","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"life-insurance-requirement","term":"Life insurance requirement","group":"The loan itself","definition":"The SBA's mandate that borrowers with an ownership stake of 20% or more obtain life insurance to cover the outstanding loan balance. This protects the lender if a key principal dies.","url":"https://dealroom.so/glossary/life-insurance-requirement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"universal-life-insurance","url":"https://dealroom.so/glossary/universal-life-insurance"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"}]},{"slug":"universal-life-insurance","term":"Universal life insurance","group":"The loan itself","definition":"A type of permanent life insurance policy that offers flexible premiums and a savings component. While permanent, the SBA typically prefers term life for its collateral requirement due to simplicity.","url":"https://dealroom.so/glossary/universal-life-insurance","official_sources":[],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"life-insurance-requirement","url":"https://dealroom.so/glossary/life-insurance-requirement"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"servicing-and-liquidation","term":"Servicing and liquidation","group":"Doing the deal","definition":"The two post-disbursement phases of an SBA loan: \"servicing\" involves managing the loan throughout its life, and \"liquidation\" is the process of recovering funds if the loan defaults.","url":"https://dealroom.so/glossary/servicing-and-liquidation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral-liquidation","url":"https://dealroom.so/glossary/collateral-liquidation"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"}]},{"slug":"substitution-of-significant-collateral","term":"Substitution of significant collateral","group":"Doing the deal","definition":"The process of replacing a major piece of collateral securing an SBA loan with another asset of equal or greater value. This requires SBA and lender approval.","url":"https://dealroom.so/glossary/substitution-of-significant-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"underwrite","term":"Underwrite","group":"Doing the deal","definition":"The process where a lender assesses your creditworthiness and the business's financials to decide if they'll approve the loan. It determines if you're a good risk for the SBA 7(a) loan.","url":"https://dealroom.so/glossary/underwrite","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"variable-rate-7-a-loan","term":"Variable-rate 7(a) loan","aka":"Variable interest rate","group":"The loan itself","definition":"An SBA 7(a) loan where the interest rate can change over time, typically tied to a base rate plus a fixed spread. This means your monthly payment can fluctuate.","url":"https://dealroom.so/glossary/variable-rate-7-a-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"federal-funds-effective-rate","term":"Federal Funds Effective Rate","group":"The loan itself","definition":"The interest rate at which depository institutions lend reserve balances to other depository institutions overnight. 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This means faster closing times for you.","url":"https://dealroom.so/glossary/preferred-lenders-program","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"underwriting-costs","term":"Underwriting costs","group":"Doing the deal","definition":"These are expenses the lender incurs to evaluate your loan application, assess risk, and ensure compliance. They cover due diligence on the borrower and business.","url":"https://dealroom.so/glossary/underwriting-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-fees","url":"https://dealroom.so/glossary/lender-closing-fees"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"check-cashing-business","term":"Check-cashing business","group":"The loan itself","definition":"Businesses primarily engaged in check cashing are generally ineligible for SBA 7(a) loans. The SBA has rules against funding certain financial service businesses.","url":"https://dealroom.so/glossary/check-cashing-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"casino","term":"Casino","group":"The loan itself","definition":"Businesses primarily engaged in gambling, including casinos, are ineligible for SBA 7(a) loans. The SBA does not support enterprises involved in games of chance.","url":"https://dealroom.so/glossary/casino","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"private-club-that-restricts-membership","term":"Private club that restricts membership","group":"The loan itself","definition":"Private clubs that restrict membership based on criteria other than capacity are ineligible for SBA 7(a) loans. The SBA requires broad access for businesses it funds.","url":"https://dealroom.so/glossary/private-club-that-restricts-membership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"}]},{"slug":"negotiated-spread","term":"Negotiated spread","group":"The loan itself","definition":"This is the interest rate percentage added by the lender to the base rate (like WSJ Prime or Term SOFR) to determine your final variable interest rate. It's a key component of your loan cost.","url":"https://dealroom.so/glossary/negotiated-spread","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"}]},{"slug":"past-defaults","term":"Past defaults","group":"People and paperwork","definition":"This refers to any prior instances where you or a key principal failed to repay a loan or meet other debt obligations. Lenders review this as part of your creditworthiness.","url":"https://dealroom.so/glossary/past-defaults","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"}]},{"slug":"for-profit-subsidiary","term":"For-profit subsidiary","group":"Reading the business","definition":"This is a business entity owned or controlled by another organization, often a non-profit, that operates to generate profit. Its financial performance is crucial to your valuation.","url":"https://dealroom.so/glossary/for-profit-subsidiary","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"501-c-3","term":"501(c)(3)","group":"People and paperwork","definition":"This is a section of the IRS tax code designating certain non-profit organizations as tax-exempt. Businesses with this status are generally ineligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/501-c-3","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"organizational-documents","url":"https://dealroom.so/glossary/organizational-documents"},{"slug":"for-profit-subsidiary","url":"https://dealroom.so/glossary/for-profit-subsidiary"}]},{"slug":"organizational-documents","term":"Organizational documents","group":"People and paperwork","definition":"These are the legal papers that establish a business entity, like Articles of Incorporation or an Operating Agreement. Lenders review them to confirm legal structure and ownership.","url":"https://dealroom.so/glossary/organizational-documents","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"tax-filings","term":"Tax filings","group":"People and paperwork","definition":"These are the financial reports a business submits to the government, like federal and state income tax returns. As a buyer, you need to review past filings to verify the business's reported income and expenses.","url":"https://dealroom.so/glossary/tax-filings","official_sources":[],"related":[{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"non-owner-occupied-property","term":"Non-owner-occupied property","group":"The loan itself","definition":"This refers to real estate where the business owner does not operate their primary business. For SBA 7(a) loans, real estate must generally be owner-occupied, meaning your business must use at least 51% of the space.","url":"https://dealroom.so/glossary/non-owner-occupied-property","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"net-income-after-federal-taxes","term":"Net income after federal taxes","group":"Reading the business","definition":"This is the profit a business has left after all expenses, including federal income taxes, have been paid. It's the bottom line on the income statement, showing the true profitability available to owners.","url":"https://dealroom.so/glossary/net-income-after-federal-taxes","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"}]},{"slug":"pyramidal-distribution-system","term":"Pyramidal distribution system","group":"The loan itself","definition":"This is a business structure where participants primarily earn money by recruiting new members, rather than selling actual products or services. These businesses are ineligible for SBA loans.","url":"https://dealroom.so/glossary/pyramidal-distribution-system","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"multi-level-marketing-company","url":"https://dealroom.so/glossary/multi-level-marketing-company"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"downline","term":"Downline","group":"Reading the business","definition":"In a multi-level marketing (MLM) or direct sales business, your downline refers to the network of distributors you've recruited and their subsequent recruits. You earn commissions on their sales.","url":"https://dealroom.so/glossary/downline","official_sources":[],"related":[{"slug":"pyramidal-distribution-system","url":"https://dealroom.so/glossary/pyramidal-distribution-system"},{"slug":"multi-level-marketing-company","url":"https://dealroom.so/glossary/multi-level-marketing-company"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"cash-out-refinance","term":"Cash-out refinance","group":"The loan itself","definition":"This is when you refinance an existing loan for a larger amount than currently owed, taking the difference in cash. It's often used with home equity but is generally not permitted with SBA 7(a) business acquisition loans.","url":"https://dealroom.so/glossary/cash-out-refinance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"refinancing","url":"https://dealroom.so/glossary/refinancing"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"equity-credit","term":"Equity credit","group":"Your money in the deal","definition":"This isn't a direct cash injection but refers to certain non-cash contributions a buyer can make towards their required equity injection for an SBA loan. It's less common for acquisitions.","url":"https://dealroom.so/glossary/equity-credit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"}]},{"slug":"deed","term":"Deed","group":"People and paperwork","definition":"A legal document that transfers ownership of real estate from one party to another. If you're buying a business with real estate, you'll receive a deed at closing.","url":"https://dealroom.so/glossary/deed","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"fiduciary","term":"Fiduciary","group":"People and paperwork","definition":"A person or entity legally and ethically obligated to act in the best interest of another party. Your lawyer or M&A advisor should act as your fiduciary.","url":"https://dealroom.so/glossary/fiduciary","official_sources":[],"related":[{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"restrictive-covenant","term":"Restrictive covenant","group":"Doing the deal","definition":"A clause in a contract that limits a party's actions, such as a non-compete agreement preventing the seller from opening a similar business nearby. These protect your newly acquired business.","url":"https://dealroom.so/glossary/restrictive-covenant","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"}]},{"slug":"supply-agreement","term":"Supply agreement","group":"People and paperwork","definition":"A contract between a business and its supplier, outlining the terms for the purchase and delivery of goods or services. You need to review these to understand ongoing costs and dependencies.","url":"https://dealroom.so/glossary/supply-agreement","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"write-off","term":"Write-off","group":"Reading the business","definition":"An accounting term for reducing the value of an asset or eliminating an uncollectible debt from a company's books, often reducing taxable income. Buyers should understand what's truly a business expense versus a discretionary owner perk.","url":"https://dealroom.so/glossary/write-off","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"purchase-price-allocation","term":"Purchase price allocation","aka":"PPA","group":"Reading the business","definition":"This is how the total purchase price of a business is legally assigned to its various assets (e.g., equipment, inventory, goodwill) for tax purposes. It impacts future depreciation and tax liabilities for you.","url":"https://dealroom.so/glossary/purchase-price-allocation","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"repair-or-denial-of-the-sba-guaranty","term":"Repair or denial of the SBA guaranty","aka":"Call of the guaranty","group":"The loan itself","definition":"This occurs if your lender makes a mistake or violates SBA rules, causing the SBA to reduce or refuse to pay its guaranty to the lender if you default. This is a lender-side risk, but it affects you indirectly.","url":"https://dealroom.so/glossary/repair-or-denial-of-the-sba-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"certificate-of-title","term":"Certificate of Title","group":"People and paperwork","definition":"A legal document proving ownership of an asset, often a vehicle or real estate. For buyers, it confirms the seller can legally transfer specific property, preventing future ownership disputes.","url":"https://dealroom.so/glossary/certificate-of-title","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ownership-structure","url":"https://dealroom.so/glossary/ownership-structure"},{"slug":"commercial-real-estate-acquisition","url":"https://dealroom.so/glossary/commercial-real-estate-acquisition"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"lienholder","term":"Lienholder","group":"People and paperwork","definition":"The party, usually a lender, that holds a legal claim (lien) on an asset as collateral for a debt. As a buyer, you need to know who has claims on business assets you're acquiring.","url":"https://dealroom.so/glossary/lienholder","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"priority","url":"https://dealroom.so/glossary/priority"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"constructive-notice","term":"Constructive Notice","group":"Doing the deal","definition":"Legal fiction meaning a person is presumed to know information because it's publicly recorded, even if they didn't actually see it. This impacts you because public records affect what you're buying.","url":"https://dealroom.so/glossary/constructive-notice","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"priority","url":"https://dealroom.so/glossary/priority"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"priority","term":"Priority","group":"Doing the deal","definition":"The order in which creditors get paid from a debtor's assets if the business defaults or liquidates. For buyers, understanding lien priority determines whose claims come first.","url":"https://dealroom.so/glossary/priority","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lienholder","url":"https://dealroom.so/glossary/lienholder"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"fdd-addendum","term":"FDD Addendum","aka":"Franchise Disclosure Document Addendum","group":"People and paperwork","definition":"A separate document that modifies or updates the standard Franchise Disclosure Document (FDD). For a buyer, it contains critical, recent changes to the franchise offering.","url":"https://dealroom.so/glossary/fdd-addendum","official_sources":[],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"environmental-records-search","term":"Environmental Records Search","group":"Reading the business","definition":"A review of government databases for environmental issues associated with a property. As a buyer, it identifies potential contamination liabilities that could cost you significant money.","url":"https://dealroom.so/glossary/environmental-records-search","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"deferred","term":"Deferred","group":"Reading the business","definition":"Postponed or put off until a later time. In financing, it often refers to payments or expenses that are not due immediately, impacting a business's short-term cash flow.","url":"https://dealroom.so/glossary/deferred","official_sources":[],"related":[{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"accruing","url":"https://dealroom.so/glossary/accruing"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"}]},{"slug":"accruing","term":"Accruing","group":"Reading the business","definition":"Building up or accumulating over time, even if not yet paid or received. This is crucial for understanding a business's true financial position, especially for unpaid liabilities or earned but uncollected revenue.","url":"https://dealroom.so/glossary/accruing","official_sources":[],"related":[{"slug":"deferred","url":"https://dealroom.so/glossary/deferred"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"partial-standby-seller-note","term":"Partial Standby Seller Note","group":"Your money in the deal","definition":"A seller note where the seller agrees to defer some principal payments, or all principal and some interest payments, while the SBA loan is outstanding. This helps meet SBA equity injection rules.","url":"https://dealroom.so/glossary/partial-standby-seller-note","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"credit-facility","term":"Credit Facility","group":"The loan itself","definition":"A general term for a type of loan or borrowing arrangement, like a term loan or line of credit. Your SBA 7(a) loan is a form of credit facility.","url":"https://dealroom.so/glossary/credit-facility","official_sources":[],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"commercial-real-estate-acquisition","term":"Commercial Real Estate Acquisition","group":"Doing the deal","definition":"The purchase of property used for business purposes, such as an office building or warehouse. If the business you're buying owns its location, this is part of your deal.","url":"https://dealroom.so/glossary/commercial-real-estate-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"environmental-records-search","url":"https://dealroom.so/glossary/environmental-records-search"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"}]},{"slug":"ownership-structure","term":"Ownership Structure","group":"People and paperwork","definition":"How a business is legally organized and who owns what percentage (e.g., sole proprietorship, LLC, corporation). This dictates how the business is bought and managed.","url":"https://dealroom.so/glossary/ownership-structure","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"personal-background-check","term":"Personal Background Check","group":"People and paperwork","definition":"An investigation into a person's financial, criminal, and personal history. Your SBA lender will conduct one on you as a key principal.","url":"https://dealroom.so/glossary/personal-background-check","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"maximum-allowable-rate","term":"Maximum Allowable Rate","group":"The loan itself","definition":"The highest interest rate an SBA lender is permitted to charge on a 7(a) loan, consisting of a base rate plus a spread. This caps your borrowing costs.","url":"https://dealroom.so/glossary/maximum-allowable-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"base-rate","url":"https://dealroom.so/glossary/base-rate"}]},{"slug":"maximum-spread","term":"Maximum spread","group":"The loan itself","definition":"This is the highest interest rate a lender can charge you on an SBA 7(a) loan, calculated as a set percentage added to a base rate like WSJ Prime. It protects you from excessive interest costs.","url":"https://dealroom.so/glossary/maximum-spread","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"base-rate","url":"https://dealroom.so/glossary/base-rate"}]},{"slug":"passive-entity","term":"Passive entity","group":"The loan itself","definition":"A business or trust that doesn't actively conduct trade or business, primarily holding assets like real estate or equipment. The SBA generally won't lend directly to these.","url":"https://dealroom.so/glossary/passive-entity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"investment-business","url":"https://dealroom.so/glossary/investment-business"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"active-involvement","term":"Active involvement","group":"The loan itself","definition":"The SBA requires the buyer (borrower) to be actively involved in the day-to-day management of the business being acquired. This means you can't be a passive investor.","url":"https://dealroom.so/glossary/active-involvement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"investment-business","url":"https://dealroom.so/glossary/investment-business"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"}]},{"slug":"investment-vehicle","term":"Investment vehicle","group":"Your money in the deal","definition":"A legal entity or structure, like an LLC or partnership, used to make and manage investments. It's how you might hold your ownership in the acquired business.","url":"https://dealroom.so/glossary/investment-vehicle","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"investment-business","url":"https://dealroom.so/glossary/investment-business"}]},{"slug":"investment-business","term":"Investment business","group":"The loan itself","definition":"A business primarily engaged in investing, lending, or speculating. The SBA generally considers these ineligible for 7(a) loans because they don't produce goods or services.","url":"https://dealroom.so/glossary/investment-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"passive-entity","url":"https://dealroom.so/glossary/passive-entity"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"active-involvement","url":"https://dealroom.so/glossary/active-involvement"}]},{"slug":"venture-capital-fund","term":"Venture capital fund","group":"Your money in the deal","definition":"A type of fund that invests in startups and small businesses with high growth potential, typically in exchange for equity. These are not direct buyers using SBA loans.","url":"https://dealroom.so/glossary/venture-capital-fund","official_sources":[],"related":[{"slug":"investment-vehicle","url":"https://dealroom.so/glossary/investment-vehicle"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"search-fund","url":"https://dealroom.so/glossary/search-fund"}]},{"slug":"irs-payment-plan","term":"IRS payment plan","group":"People and paperwork","definition":"An agreement with the IRS to pay overdue taxes in installments. Lenders will review this history closely as part of your financial character.","url":"https://dealroom.so/glossary/irs-payment-plan","official_sources":[],"related":[{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"full-satisfaction","term":"Full satisfaction","group":"Doing the deal","definition":"The complete payment of a debt or fulfillment of an obligation, releasing the debtor from further liability. This is the goal for all debts in a deal.","url":"https://dealroom.so/glossary/full-satisfaction","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"discharge","url":"https://dealroom.so/glossary/discharge"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"asset-liquidation","term":"Asset Liquidation","group":"Doing the deal","definition":"Converting assets into cash, often to pay off debts or distribute funds. This happens if a business fails or assets are sold off.","url":"https://dealroom.so/glossary/asset-liquidation","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"cash-gift","term":"Cash Gift","group":"Your money in the deal","definition":"Funds received as a gift, often from a family member, that can be used for your equity injection in an SBA loan. It must be truly a gift with no repayment expectation.","url":"https://dealroom.so/glossary/cash-gift","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"economic-development-agency","term":"Economic Development Agency","group":"People and paperwork","definition":"A government or non-profit organization focused on promoting economic growth and job creation in a specific area. They sometimes offer local incentives or resources.","url":"https://dealroom.so/glossary/economic-development-agency","official_sources":[],"related":[{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"exclusive-supply-contract","term":"Exclusive Supply Contract","group":"Reading the business","definition":"A legal agreement where a business commits to purchasing all or a specified percentage of its supply of a certain good or service from a single supplier.","url":"https://dealroom.so/glossary/exclusive-supply-contract","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"}]},{"slug":"aggregation","term":"Aggregation","group":"Reading the business","definition":"The process of combining multiple small businesses or assets into a larger entity to achieve economies of scale or market dominance.","url":"https://dealroom.so/glossary/aggregation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"search-fund","url":"https://dealroom.so/glossary/search-fund"}]},{"slug":"option","term":"Option","group":"Doing the deal","definition":"A contract giving the holder the right, but not the obligation, to buy or sell an asset at a specified price within a certain timeframe.","url":"https://dealroom.so/glossary/option","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"convertible-security","term":"Convertible Security","group":"Your money in the deal","definition":"This is a type of investment that starts as debt but can convert into equity (ownership shares) under certain conditions. For a small business acquisition, it's rare and can complicate your ownership structure.","url":"https://dealroom.so/glossary/convertible-security","official_sources":[],"related":[{"slug":"voting-stock","url":"https://dealroom.so/glossary/voting-stock"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"voting-stock","term":"Voting Stock","group":"Your money in the deal","definition":"This refers to shares of ownership in a corporation that grant the holder the right to vote on company matters, such as electing directors. It's critical because it determines who controls the business.","url":"https://dealroom.so/glossary/voting-stock","official_sources":[],"related":[{"slug":"convertible-security","url":"https://dealroom.so/glossary/convertible-security"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"consolidated-financial-statement","term":"Consolidated Financial Statement","group":"Reading the business","definition":"This combines the financial statements of a parent company and all its subsidiaries into a single report. It gives you a complete picture of the economic performance and financial position of an entire group of related entities.","url":"https://dealroom.so/glossary/consolidated-financial-statement","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"ucc-financing-statement","term":"UCC Financing Statement","group":"People and paperwork","definition":"Also known as a UCC-1, this is a public notice filed by a lender to establish its legal claim (lien) on a borrower's assets used as collateral. It alerts other creditors that specific assets are already pledged.","url":"https://dealroom.so/glossary/ucc-financing-statement","official_sources":[],"related":[{"slug":"ucc-1","url":"https://dealroom.so/glossary/ucc-1"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"article-9-of-the-uniform-commercial-code","term":"Article 9 of the Uniform Commercial Code","group":"People and paperwork","definition":"This is a set of laws governing secured transactions, specifically how lenders can take a security interest in personal property and fixtures. It dictates how liens are created, perfected, and enforced.","url":"https://dealroom.so/glossary/article-9-of-the-uniform-commercial-code","official_sources":[],"related":[{"slug":"ucc-financing-statement","url":"https://dealroom.so/glossary/ucc-financing-statement"},{"slug":"uniform-commercial-code","url":"https://dealroom.so/glossary/uniform-commercial-code"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"debarment","term":"Debarment","group":"People and paperwork","definition":"This is a severe penalty where an individual or business is excluded from participating in federal government contracts, loans, or other programs. Being debarred means you cannot obtain an SBA loan.","url":"https://dealroom.so/glossary/debarment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"debarred-from-federal-programs","url":"https://dealroom.so/glossary/debarred-from-federal-programs"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"fiscal-agent","term":"Fiscal Agent","group":"People and paperwork","definition":"A fiscal agent handles financial matters, such as managing funds, making payments, and maintaining financial records, on behalf of another party. This role is less common in typical SBA 7(a) acquisitions.","url":"https://dealroom.so/glossary/fiscal-agent","official_sources":[],"related":[{"slug":"servicing-agent","url":"https://dealroom.so/glossary/servicing-agent"},{"slug":"fiscal-and-transfer-agent","url":"https://dealroom.so/glossary/fiscal-and-transfer-agent"}]},{"slug":"ach","term":"ACH","group":"Doing the deal","definition":"ACH stands for Automated Clearing House, an electronic network for processing financial transactions in the US. It's commonly used for direct deposits, bill payments, and recurring loan payments.","url":"https://dealroom.so/glossary/ach","official_sources":[],"related":[{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"servicing-agent","term":"Servicing Agent","group":"People and paperwork","definition":"This is the entity responsible for managing your loan after it has been funded, including collecting payments, handling inquiries, and managing escrow accounts. Often, your direct lender is also the servicing agent.","url":"https://dealroom.so/glossary/servicing-agent","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"fiscal-agent","url":"https://dealroom.so/glossary/fiscal-agent"}]},{"slug":"loan-acceleration","term":"Loan Acceleration","group":"The loan itself","definition":"This is a clause in your loan agreement that allows the lender to demand immediate repayment of the entire outstanding loan balance if you default on the terms. It's a serious consequence of non-compliance.","url":"https://dealroom.so/glossary/loan-acceleration","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"loan-restructuring","url":"https://dealroom.so/glossary/loan-restructuring"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"}]},{"slug":"loan-restructuring","term":"Loan Restructuring","group":"The loan itself","definition":"This involves modifying the original terms of a loan, such as the repayment schedule, interest rate, or maturity date, to make it more manageable for a struggling borrower. It's a way to avoid default.","url":"https://dealroom.so/glossary/loan-restructuring","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-acceleration","url":"https://dealroom.so/glossary/loan-acceleration"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"deferment-period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"}]},{"slug":"risk-rating","term":"Risk Rating","group":"Reading the business","definition":"This is an internal assessment by the lender of the creditworthiness and likelihood of default for a borrower. It directly impacts the loan's pricing, terms, and the probability of approval.","url":"https://dealroom.so/glossary/risk-rating","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"construction-contingency-reserve","term":"Construction Contingency Reserve","group":"The loan itself","definition":"This is a portion of loan funds set aside specifically to cover unforeseen costs or delays that may arise during a construction or renovation project. It's a mandatory safeguard for such projects.","url":"https://dealroom.so/glossary/construction-contingency-reserve","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"private-lender","term":"Private Lender","group":"People and paperwork","definition":"This refers to an individual or non-bank institution that provides loans, often with different criteria and terms than traditional banks. They can be a source of capital but come with their own set of considerations.","url":"https://dealroom.so/glossary/private-lender","official_sources":[],"related":[{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"not-engaged-in-lending-rule","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule"}]},{"slug":"current-assets","term":"Current Assets","group":"Reading the business","definition":"Assets convertible to cash within one year, like inventory and accounts receivable. They show a business's short-term liquidity and ability to meet immediate obligations.","url":"https://dealroom.so/glossary/current-assets","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"}]},{"slug":"eligibility-requirements","term":"Eligibility Requirements","group":"The loan itself","definition":"The criteria set by the SBA and lenders that a business and its owners must meet to qualify for a 7(a) loan. Failing to meet these means no loan.","url":"https://dealroom.so/glossary/eligibility-requirements","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-borrower","url":"https://dealroom.so/glossary/ineligible-borrower"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"approved-payment-plan","term":"Approved Payment Plan","group":"People and paperwork","definition":"A formal agreement with a taxing authority to pay delinquent taxes over time. This plan must be current and approved by the SBA to avoid disqualifying your loan.","url":"https://dealroom.so/glossary/approved-payment-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"tax-delinquencies","url":"https://dealroom.so/glossary/tax-delinquencies"},{"slug":"tax-transcripts","url":"https://dealroom.so/glossary/tax-transcripts"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"tax-transcripts","term":"Tax Transcripts","aka":"IRS transcripts (4506-T)","group":"People and paperwork","definition":"Official records of your past tax filings and payments directly from the IRS. Lenders require these to verify income, confirm tax compliance, and spot delinquencies.","url":"https://dealroom.so/glossary/tax-transcripts","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"tax-delinquencies","url":"https://dealroom.so/glossary/tax-delinquencies"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"tax-delinquencies","term":"Tax Delinquencies","group":"Reading the business","definition":"Unpaid or overdue taxes owed to federal, state, or local authorities. These are a red flag for lenders, indicating financial instability or mismanagement.","url":"https://dealroom.so/glossary/tax-delinquencies","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"approved-payment-plan","url":"https://dealroom.so/glossary/approved-payment-plan"},{"slug":"tax-transcripts","url":"https://dealroom.so/glossary/tax-transcripts"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"credit-risk-profile","url":"https://dealroom.so/glossary/credit-risk-profile"}]},{"slug":"security-asset","term":"Security Asset","aka":"Collateral","group":"The loan itself","definition":"An asset pledged by the borrower to a lender as collateral for a loan. If you default, the lender can seize and sell this asset to recover their funds.","url":"https://dealroom.so/glossary/security-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"bankruptcy-proceedings","term":"Bankruptcy Proceedings","group":"Doing the deal","definition":"Legal processes to resolve financial insolvency, either by liquidating assets to pay creditors or by reorganizing debt. Prior bankruptcies can impact loan eligibility.","url":"https://dealroom.so/glossary/bankruptcy-proceedings","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"credit-risk-profile","url":"https://dealroom.so/glossary/credit-risk-profile"},{"slug":"discharge","url":"https://dealroom.so/glossary/discharge"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"lien-satisfaction","term":"Lien Satisfaction","aka":"Lien Release","group":"Doing the deal","definition":"The formal process of removing a lien from an asset once the underlying debt it secured has been fully paid. This clears the asset's title.","url":"https://dealroom.so/glossary/lien-satisfaction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"cash-advance","term":"Cash Advance","aka":"Merchant Cash Advance","group":"The loan itself","definition":"A short-term loan, often with high fees and interest, typically secured by future receivables. The SBA generally disallows using 7(a) funds to pay off these predatory loans.","url":"https://dealroom.so/glossary/cash-advance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"credit-line","term":"Credit Line","aka":"Line of Credit","group":"The loan itself","definition":"A flexible loan arrangement allowing a borrower to draw funds up to a set limit, repay, and redraw as needed. It's used for working capital or short-term needs.","url":"https://dealroom.so/glossary/credit-line","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-express","url":"https://dealroom.so/glossary/sba-express"}]},{"slug":"credit-risk-profile","term":"Credit Risk Profile","group":"Reading the business","definition":"An assessment of a borrower's likelihood to default on debt, based on their financial history, credit scores, and stability. Lenders use this to decide on loan approval and terms.","url":"https://dealroom.so/glossary/credit-risk-profile","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"shell-company","term":"Shell Company","group":"People and paperwork","definition":"A company that exists legally but has no significant assets, operations, or employees. It's often used for financial maneuvering or to obscure ownership.","url":"https://dealroom.so/glossary/shell-company","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"subcontractor","term":"Subcontractor","group":"People and paperwork","definition":"A person or company hired by a primary contractor to perform a specific part of a larger project. They are not direct employees of the main business.","url":"https://dealroom.so/glossary/subcontractor","official_sources":[],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"ineligible-borrower","term":"Ineligible Borrower","group":"People and paperwork","definition":"An individual or entity that does not meet the SBA's or lender's criteria for receiving a 7(a) loan, often due to character, financial history, or past federal defaults.","url":"https://dealroom.so/glossary/ineligible-borrower","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-requirements","url":"https://dealroom.so/glossary/eligibility-requirements"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"debarred-from-federal-programs","url":"https://dealroom.so/glossary/debarred-from-federal-programs"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"}]},{"slug":"disqualifying-conviction","term":"Disqualifying Conviction","group":"People and paperwork","definition":"A serious criminal conviction that makes you ineligible for an SBA loan. The SBA checks the background of all owners, so this matters for every key principal.","url":"https://dealroom.so/glossary/disqualifying-conviction","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"perfection","term":"Perfection","group":"Doing the deal","definition":"The legal process lenders use to protect their security interest in collateral, making their claim superior to others. This ensures the lender can seize assets if you default.","url":"https://dealroom.so/glossary/perfection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"assignment-of-claims-act","term":"Assignment of Claims Act","group":"People and paperwork","definition":"A federal law that allows businesses to assign payments from government contracts to a lender. This is crucial if a significant portion of the business's revenue comes from government contracts.","url":"https://dealroom.so/glossary/assignment-of-claims-act","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"government-contracting-officer","url":"https://dealroom.so/glossary/government-contracting-officer"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"government-contracting-officer","term":"Government Contracting Officer","group":"People and paperwork","definition":"The government representative authorized to enter into, administer, or terminate contracts on behalf of the U.S. government. They are the key contact for any business with federal contracts.","url":"https://dealroom.so/glossary/government-contracting-officer","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"assignment-of-claims-act","url":"https://dealroom.so/glossary/assignment-of-claims-act"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"}]},{"slug":"fund-tracing","term":"Fund Tracing","group":"Reading the business","definition":"The process lenders use to verify the source and legitimacy of your equity injection. They need to confirm your funds are truly \"seasoned\" and not disguised debt.","url":"https://dealroom.so/glossary/fund-tracing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"customer-retention","term":"Customer Retention","group":"Reading the business","definition":"The ability of a business to keep its existing customers over time. High retention rates indicate a stable customer base, which is a strong sign of business health and future cash flow.","url":"https://dealroom.so/glossary/customer-retention","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"inadequate-underwriting","term":"Inadequate Underwriting","group":"The loan itself","definition":"When a lender fails to properly assess a borrower's creditworthiness, collateral, or the business's ability to repay the loan. This can lead to a loan default and potentially an SBA guaranty purchase denial.","url":"https://dealroom.so/glossary/inadequate-underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"commodity-speculation","term":"Commodity Speculation","group":"Reading the business","definition":"Buying or selling commodities with the hope of profiting from price fluctuations. Businesses primarily engaged in this activity are ineligible for SBA 7(a) loans.","url":"https://dealroom.so/glossary/commodity-speculation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"rare-coin-stamp-collecting","url":"https://dealroom.so/glossary/rare-coin-stamp-collecting"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"}]},{"slug":"rare-coin-stamp-collecting","term":"Rare Coin/Stamp Collecting","group":"Reading the business","definition":"A business focused on the collection, buying, and selling of rare coins or stamps. The SBA generally considers these businesses ineligible for 7(a) loans.","url":"https://dealroom.so/glossary/rare-coin-stamp-collecting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"commodity-speculation","url":"https://dealroom.so/glossary/commodity-speculation"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"}]},{"slug":"hidden-equity-injection","term":"Hidden Equity Injection","group":"Your money in the deal","definition":"Funds that appear to be part of your required down payment but are actually financed by the seller or another third party without the lender's knowledge. This is strictly prohibited by the SBA.","url":"https://dealroom.so/glossary/hidden-equity-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"conventional-lending-practices","term":"Conventional Lending Practices","group":"The loan itself","definition":"The standard loan underwriting and approval criteria used by banks for loans not backed by government guarantees. SBA loans often bridge gaps where conventional financing isn't available.","url":"https://dealroom.so/glossary/conventional-lending-practices","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"}]},{"slug":"credit-analysis-process","term":"Credit Analysis Process","group":"Reading the business","definition":"The systematic evaluation by a lender of a borrower's creditworthiness and ability to repay a loan. This involves reviewing financial statements, credit history, and business viability.","url":"https://dealroom.so/glossary/credit-analysis-process","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"control-factor","term":"Control Factor","group":"Reading the business","definition":"The percentage of ownership or operational influence an individual or entity has over a business. The SBA uses this to determine who is considered a \"principal\" and to assess affiliation.","url":"https://dealroom.so/glossary/control-factor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"}]},{"slug":"sba-guaranteed-loan","term":"SBA-Guaranteed Loan","group":"The loan itself","definition":"A loan made by a commercial lender, partially guaranteed by the Small Business Administration. This reduces risk for the lender, making financing more accessible for small businesses.","url":"https://dealroom.so/glossary/sba-guaranteed-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"conventional-lending-practices","url":"https://dealroom.so/glossary/conventional-lending-practices"}]},{"slug":"unlimited-guaranty","term":"Unlimited Guaranty","group":"People and paperwork","definition":"An Unlimited Guaranty means the guarantor is personally liable for the entire loan amount, not just a portion. For buyers, this is the standard for anyone with significant ownership, making your personal assets fair game if the business defaults.","url":"https://dealroom.so/glossary/unlimited-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"financial-interest","term":"Financial Interest","group":"Your money in the deal","definition":"This refers to any stake an individual or entity has in the business, whether through ownership, debt, or other arrangements. For buyers, it defines who needs to be part of the deal structure, especially regarding equity injection and guaranties.","url":"https://dealroom.so/glossary/financial-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"de-facto-ownership","url":"https://dealroom.so/glossary/de-facto-ownership"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"employee-based-size-standards","term":"Employee-Based Size Standards","group":"Reading the business","definition":"These are thresholds set by the SBA, defining a \"small business\" based on the average number of employees. Buyers must ensure the target business, including any affiliates, meets these standards to be eligible for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/employee-based-size-standards","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"affiliation-issues","url":"https://dealroom.so/glossary/affiliation-issues"}]},{"slug":"attestation","term":"Attestation","group":"People and paperwork","definition":"An attestation is a formal declaration that something is true, often required in writing under penalty of perjury. Buyers will encounter these in SBA forms, where you're affirming the accuracy of your submitted information.","url":"https://dealroom.so/glossary/attestation","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"cpa-prepared-statements","term":"CPA-Prepared Statements","group":"Reading the business","definition":"These are financial statements compiled, reviewed, or audited by a Certified Public Accountant. Lenders require these to verify the historical financial performance of the business, which is critical for underwriting the loan.","url":"https://dealroom.so/glossary/cpa-prepared-statements","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"post-closing-consulting-agreement","term":"Post-Closing Consulting Agreement","group":"Doing the deal","definition":"This is an agreement where the seller stays on for a period after closing to provide consulting services to the buyer. It's often used to ensure a smooth transition of operations and customer relationships.","url":"https://dealroom.so/glossary/post-closing-consulting-agreement","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"}]},{"slug":"market-rate","term":"Market Rate","group":"The loan itself","definition":"This refers to the prevailing interest rate for loans of similar risk and term in the current financial environment. For SBA loans, the interest rate is typically tied to a base rate plus a spread, reflecting market conditions.","url":"https://dealroom.so/glossary/market-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"}]},{"slug":"de-facto-ownership","term":"De Facto Ownership","group":"People and paperwork","definition":"This means exercising control over a business even without formal legal ownership. The SBA looks for this to identify all individuals who should be subject to eligibility rules and personal guaranties.","url":"https://dealroom.so/glossary/de-facto-ownership","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"financial-interest","url":"https://dealroom.so/glossary/financial-interest"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"affiliation-issues","term":"Affiliation Issues","group":"Reading the business","definition":"These arise when the SBA determines that two or more businesses are linked by common ownership, management, or contractual relationships. This can combine their size, potentially making the combined entity too large for an SBA loan.","url":"https://dealroom.so/glossary/affiliation-issues","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"employee-based-size-standards","url":"https://dealroom.so/glossary/employee-based-size-standards"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"gifted-equity","term":"Gifted Equity","group":"Your money in the deal","definition":"This is a portion of the buyer's equity injection that comes from a gift, typically from a family member. It can count towards the buyer's required down payment, but has strict SBA requirements.","url":"https://dealroom.so/glossary/gifted-equity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unconditional","url":"https://dealroom.so/glossary/unconditional"}]},{"slug":"unconditional","term":"Unconditional","group":"People and paperwork","definition":"This term signifies that an agreement or obligation has no strings attached or prerequisites. In SBA loans, it's crucial for things like personal guaranties and gifted equity, meaning they can't be revoked or dependent on future events.","url":"https://dealroom.so/glossary/unconditional","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"irrevocable","url":"https://dealroom.so/glossary/irrevocable"},{"slug":"unlimited-guaranty","url":"https://dealroom.so/glossary/unlimited-guaranty"},{"slug":"gifted-equity","url":"https://dealroom.so/glossary/gifted-equity"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"irrevocable","term":"Irrevocable","group":"People and paperwork","definition":"Something that is irrevocable cannot be reversed, canceled, or changed. This is critical for commitments like letters of credit or gifted funds, assuring the SBA that funds or obligations are permanent.","url":"https://dealroom.so/glossary/irrevocable","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"unconditional","url":"https://dealroom.so/glossary/unconditional"},{"slug":"gifted-equity","url":"https://dealroom.so/glossary/gifted-equity"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"assignable","term":"Assignable","group":"Doing the deal","definition":"An assignable contract or asset means its rights and obligations can be transferred to another party. In an acquisition, you'll want key contracts, like the business's lease, to be assignable to you as the buyer.","url":"https://dealroom.so/glossary/assignable","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"leasehold-estate","term":"Leasehold Estate","group":"Reading the business","definition":"This is a legal right to occupy and use real property for a defined period under a lease agreement. For buyers, understanding the terms and duration of the business's lease is vital for operational stability and collateral.","url":"https://dealroom.so/glossary/leasehold-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"assignable","url":"https://dealroom.so/glossary/assignable"}]},{"slug":"renewal-option","term":"Renewal Option","group":"Doing the deal","definition":"A clause in a lease or contract letting you extend its term. For a buyer, this ensures continued access to critical business assets like a prime location or key supplier contracts.","url":"https://dealroom.so/glossary/renewal-option","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"assignability-clause","term":"Assignability Clause","group":"Doing the deal","definition":"A contract term that dictates whether a party can transfer its rights and obligations to a third party. As a buyer, you need key contracts to be assignable to your new entity.","url":"https://dealroom.so/glossary/assignability-clause","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"non-payment-clause","term":"Non-Payment Clause","group":"The loan itself","definition":"A section in your loan agreement specifying what happens if you miss a payment. This details the lender's rights, which can include declaring the loan in default.","url":"https://dealroom.so/glossary/non-payment-clause","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"payment-deferment","url":"https://dealroom.so/glossary/payment-deferment"}]},{"slug":"government-debt-default","term":"Government Debt Default","group":"The loan itself","definition":"Failing to repay any debt owed to the U.S. government, including prior SBA loans, student loans, or taxes. This makes you ineligible for a new SBA loan.","url":"https://dealroom.so/glossary/government-debt-default","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-purpose","url":"https://dealroom.so/glossary/ineligible-purpose"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"ineligible-purpose","term":"Ineligible Purpose","group":"The loan itself","definition":"Specific uses of SBA loan proceeds that are prohibited by regulation. Buying a business for speculative purposes or personal investments, for example, is not allowed.","url":"https://dealroom.so/glossary/ineligible-purpose","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"phase-ii-site-assessment","term":"Phase II Site Assessment","aka":"Phase II ESA","group":"Reading the business","definition":"Further investigation, often involving soil or water sampling, triggered by concerns raised in a Phase I ESA. It identifies and quantifies environmental contamination.","url":"https://dealroom.so/glossary/phase-ii-site-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"payment-deferment","term":"Payment Deferment","group":"The loan itself","definition":"A temporary pause or reduction in loan payments, typically granted by the lender under specific circumstances like economic hardship. Interest usually continues to accrue.","url":"https://dealroom.so/glossary/payment-deferment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"non-payment-clause","url":"https://dealroom.so/glossary/non-payment-clause"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"}]},{"slug":"eligible-liquidation-expense","term":"Eligible Liquidation Expense","group":"Doing the deal","definition":"Costs the SBA allows a lender to incur and claim when liquidating collateral from a defaulted loan. These are typically reasonable and necessary expenses.","url":"https://dealroom.so/glossary/eligible-liquidation-expense","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"collateral-disposition-expense","url":"https://dealroom.so/glossary/collateral-disposition-expense"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"collateral-disposition-expense","term":"Collateral Disposition Expense","group":"Doing the deal","definition":"The costs associated with selling or otherwise disposing of collateral after a loan default. These expenses reduce the net proceeds applied to the outstanding loan balance.","url":"https://dealroom.so/glossary/collateral-disposition-expense","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"eligible-liquidation-expense","url":"https://dealroom.so/glossary/eligible-liquidation-expense"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"disallowance","term":"Disallowance","group":"The loan itself","definition":"When the SBA refuses to honor its guaranty to a lender, typically because the lender failed to follow SBA rules during origination or servicing.","url":"https://dealroom.so/glossary/disallowance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"unlisted-franchise-agreement","term":"Unlisted Franchise Agreement","group":"People and paperwork","definition":"A franchise agreement for a system not approved and listed on the SBA's Franchise Directory. This requires extra review and specific addendums for SBA loan eligibility.","url":"https://dealroom.so/glossary/unlisted-franchise-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-agreement-addendum","url":"https://dealroom.so/glossary/franchise-agreement-addendum"}]},{"slug":"franchise-agreement-addendum","term":"Franchise Agreement Addendum","group":"People and paperwork","definition":"A required document for SBA loans, signed by the franchisor, that modifies certain terms of an existing franchise agreement to comply with SBA eligibility rules.","url":"https://dealroom.so/glossary/franchise-agreement-addendum","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"unlisted-franchise-agreement","url":"https://dealroom.so/glossary/unlisted-franchise-agreement"},{"slug":"franchise-directory","url":"https://dealroom.so/glossary/franchise-directory"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"full-standby-status","term":"Full Standby Status","group":"Your money in the deal","definition":"A condition where a seller note or other debt owed to an associate cannot receive any principal or interest payments until the SBA loan is fully repaid. This strengthens the SBA loan's position.","url":"https://dealroom.so/glossary/full-standby-status","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"}]},{"slug":"self-certification","term":"Self-Certification","group":"People and paperwork","definition":"A statement made by you or the seller, under penalty of perjury, attesting to certain facts or conditions, often required by the SBA or lender.","url":"https://dealroom.so/glossary/self-certification","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}]},{"slug":"robs-plan","term":"ROBS Plan","aka":"Rollover for Business Start-ups Plan","group":"Your money in the deal","definition":"A Rollover for Business Start-ups (ROBS) plan lets you use your retirement funds (401k/IRA) to invest in a business without immediate taxes or penalties. It's a way to fund your equity injection using pre-tax dollars.","url":"https://dealroom.so/glossary/robs-plan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"rollover-for-business-start-up","url":"https://dealroom.so/glossary/rollover-for-business-start-up"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"undisclosed-borrowed-equity","url":"https://dealroom.so/glossary/undisclosed-borrowed-equity"}]},{"slug":"maximum-interest-rate","term":"Maximum Interest Rate","group":"The loan itself","definition":"This is the highest interest rate an SBA 7(a) loan can charge. It's set by the SBA and directly impacts your monthly loan payments and overall cost of borrowing.","url":"https://dealroom.so/glossary/maximum-interest-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"}]},{"slug":"interest-rate-risk","term":"Interest Rate Risk","group":"Reading the business","definition":"Interest rate risk is the potential for changes in market interest rates to negatively affect your loan payments. This risk primarily applies to variable rate loans.","url":"https://dealroom.so/glossary/interest-rate-risk","official_sources":[],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"fixed-interest-rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"occupancy-requirement","term":"Occupancy Requirement","group":"The loan itself","definition":"The SBA's occupancy requirement dictates that for real estate loans, the borrower's business must occupy a significant portion of the property being financed.","url":"https://dealroom.so/glossary/occupancy-requirement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"fixed-cost","term":"Fixed Cost","group":"Reading the business","definition":"A fixed cost is an expense that does not change with the level of goods or services produced, such as rent, insurance premiums, or administrative salaries.","url":"https://dealroom.so/glossary/fixed-cost","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"hud-1-settlement-statement","term":"HUD-1 Settlement Statement","group":"Doing the deal","definition":"The HUD-1 Settlement Statement is a standardized form used in real estate transactions to itemize all charges and credits for both the buyer and seller.","url":"https://dealroom.so/glossary/hud-1-settlement-statement","official_sources":[],"related":[{"slug":"recorded-deed","url":"https://dealroom.so/glossary/recorded-deed"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"recorded-deed","term":"Recorded Deed","group":"Doing the deal","definition":"A recorded deed is the legal document that transfers ownership of real property from the seller to the buyer, officially filed with the county recorder's office.","url":"https://dealroom.so/glossary/recorded-deed","official_sources":[],"related":[{"slug":"hud-1-settlement-statement","url":"https://dealroom.so/glossary/hud-1-settlement-statement"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"set-aside","term":"Set-Aside","group":"Reading the business","definition":"A set-aside refers to government contracts or procurement opportunities reserved exclusively for specific categories of small businesses, like veteran-owned or women-owned firms.","url":"https://dealroom.so/glossary/set-aside","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"unpaid-principal","term":"Unpaid Principal","group":"The loan itself","definition":"Unpaid principal is the portion of your original loan amount that you still owe, excluding any accumulated interest. This is the balance on which interest is calculated.","url":"https://dealroom.so/glossary/unpaid-principal","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"delinquent-federal-taxes","term":"Delinquent Federal Taxes","group":"Reading the business","definition":"Delinquent federal taxes are unpaid taxes owed to the U.S. government by the business or its principals. These can include income, payroll, or excise taxes.","url":"https://dealroom.so/glossary/delinquent-federal-taxes","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"rollover-for-business-start-up","term":"Rollover for Business Start-up","aka":"ROBS","group":"Your money in the deal","definition":"A Rollover for Business Start-up (ROBS) is a strategy allowing you to use your 401(k) or IRA funds to invest in a business without incurring taxes or early withdrawal penalties.","url":"https://dealroom.so/glossary/rollover-for-business-start-up","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan 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Funds","group":"Your money in the deal","definition":"Round-tripping of funds occurs when the seller or a related party secretly provides money to the buyer, which is then presented as the buyer's equity injection.","url":"https://dealroom.so/glossary/round-tripping-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"undisclosed-borrowed-equity","url":"https://dealroom.so/glossary/undisclosed-borrowed-equity"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"undisclosed-borrowed-equity","term":"Undisclosed Borrowed Equity","group":"Your money in the deal","definition":"Undisclosed borrowed equity refers to funds presented as a buyer's cash equity injection that were secretly borrowed, often from the seller or a related entity.","url":"https://dealroom.so/glossary/undisclosed-borrowed-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan 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Interest","group":"Reading the business","definition":"A minority interest represents ownership of less than 50% of a company's voting stock or equity.","url":"https://dealroom.so/glossary/minority-interest","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"pro-forma-debt-service-calculation","term":"Pro Forma Debt Service Calculation","group":"Reading the business","definition":"This calculation projects the business's future cash flow to see if it can afford the new loan payments. It tells you if the business generates enough profit to cover all its debt obligations after you buy it.","url":"https://dealroom.so/glossary/pro-forma-debt-service-calculation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"real-estate-appraisal","term":"Real Estate Appraisal","group":"Reading the business","definition":"A professional valuation of real property, required if real estate is part of the deal or used as collateral. It tells you the market value of the property, which impacts the loan amount and collateral coverage.","url":"https://dealroom.so/glossary/real-estate-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"appraiser","url":"https://dealroom.so/glossary/appraiser"}]},{"slug":"heloc","term":"HELOC","aka":"Home Equity Line of Credit","group":"Your money in the deal","definition":"A revolving credit line secured by your home's equity. Buyers sometimes use HELOC funds for their equity injection or working capital, leveraging personal assets for the deal.","url":"https://dealroom.so/glossary/heloc","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"prohibited-junior-lien","term":"Prohibited Junior Lien","group":"The loan itself","definition":"A second lien on collateral that the SBA loan uses as primary security, which is generally not allowed. The SBA loan must be in the first lien position on all significant collateral to protect its interest.","url":"https://dealroom.so/glossary/prohibited-junior-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"loan-terms","term":"Loan Terms","group":"The loan itself","definition":"The specific conditions and repayment schedule of your SBA loan, including interest rate, maturity, and payment frequency. 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This entity is legally responsible for repaying the loan and operating the acquired business.","url":"https://dealroom.so/glossary/borrowing-entity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"sole-proprietor","url":"https://dealroom.so/glossary/sole-proprietor"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"special-conditions","term":"Special Conditions","group":"The loan itself","definition":"Additional requirements or stipulations added to your SBA loan authorization by the lender or SBA. These are specific actions you must take or maintain, beyond the standard loan terms.","url":"https://dealroom.so/glossary/special-conditions","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"mortgage-deed-of-trust","term":"Mortgage/Deed of Trust","aka":"Mortgage, Deed of Trust","group":"Doing the deal","definition":"A legal document that pledges real estate as collateral for a loan, granting the lender a lien. This is how the lender secures their interest in any real property involved in the acquisition.","url":"https://dealroom.so/glossary/mortgage-deed-of-trust","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"real-estate-appraisal","url":"https://dealroom.so/glossary/real-estate-appraisal"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"}]},{"slug":"secondary-collateral","term":"Secondary Collateral","group":"The loan itself","definition":"Additional assets pledged to secure an SBA loan when the primary business assets don't fully cover the loan amount. This often includes personal assets like real estate.","url":"https://dealroom.so/glossary/secondary-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"sba-loan-guaranty","term":"SBA Loan Guaranty","aka":"SBA Guaranty","group":"The loan itself","definition":"The portion of your SBA loan that the Small Business Administration promises to pay the lender if you default. This guarantee reduces the lender's risk, making them more willing to lend.","url":"https://dealroom.so/glossary/sba-loan-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"acceleration-of-the-note","term":"Acceleration of the Note","aka":"Acceleration","group":"The loan itself","definition":"A clause in your loan agreement that allows the lender to demand immediate repayment of the entire outstanding loan balance if you default. This is a serious consequence of failing to meet your loan obligations.","url":"https://dealroom.so/glossary/acceleration-of-the-note","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"note","url":"https://dealroom.so/glossary/note"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"liquidation-proceedings","url":"https://dealroom.so/glossary/liquidation-proceedings"}]},{"slug":"liquidation-proceedings","term":"Liquidation Proceedings","aka":"Liquidation","group":"Doing the deal","definition":"The process a lender initiates to sell off a defaulted borrower's collateral to recover the outstanding loan amount. This occurs when a business fails and the lender seizes assets.","url":"https://dealroom.so/glossary/liquidation-proceedings","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"foreclosure","url":"https://dealroom.so/glossary/foreclosure"}]},{"slug":"electronic-notice-of-default","term":"Electronic Notice of Default","aka":"ENDO","group":"The loan itself","definition":"An official electronic notification from the SBA to the lender regarding a potential issue or default on an SBA-guaranteed loan. This flags loans needing attention or at risk.","url":"https://dealroom.so/glossary/electronic-notice-of-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"servicing","url":"https://dealroom.so/glossary/servicing"},{"slug":"sba-loan-guaranty","url":"https://dealroom.so/glossary/sba-loan-guaranty"}]},{"slug":"fallback-provisions","term":"Fallback Provisions","group":"Doing the deal","definition":"Contingency plans or alternative arrangements built into a deal or loan agreement to address specific risks or potential failures. These protect you if certain conditions aren't met.","url":"https://dealroom.so/glossary/fallback-provisions","official_sources":[],"related":[{"slug":"special-conditions","url":"https://dealroom.so/glossary/special-conditions"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"personal-tax-returns","term":"Personal Tax Returns","group":"People and paperwork","definition":"These are your annual tax filings with the IRS. Lenders require them to verify your income, assess your personal financial health, and confirm your ability to repay debt.","url":"https://dealroom.so/glossary/personal-tax-returns","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"borrower-certifications","url":"https://dealroom.so/glossary/borrower-certifications"}]},{"slug":"profit-motive","term":"Profit Motive","group":"Reading the business","definition":"This refers to the primary intention of a business to generate profit. The IRS and SBA require businesses to demonstrate a genuine profit motive to qualify for certain tax deductions and loan programs.","url":"https://dealroom.so/glossary/profit-motive","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"taxable-income","url":"https://dealroom.so/glossary/taxable-income"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"taxable-income","term":"Taxable Income","group":"Reading the business","definition":"This is the portion of a business's or individual's income subject to taxation after all allowable deductions. It's a key figure on tax returns, showing what the IRS considers real earnings.","url":"https://dealroom.so/glossary/taxable-income","official_sources":[],"related":[{"slug":"personal-tax-returns","url":"https://dealroom.so/glossary/personal-tax-returns"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"internal-appraisal","term":"Internal Appraisal","group":"Reading the business","definition":"This is an estimate of a business's or asset's value performed by the buyer or seller, not an independent third party. It serves as an initial assessment, often for negotiation purposes.","url":"https://dealroom.so/glossary/internal-appraisal","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"affiliated-party","term":"Affiliated Party","group":"People and paperwork","definition":"This refers to individuals or entities that are related to or have control over the borrower or the target business. The SBA scrutinizes these relationships to ensure fair dealings and prevent conflicts of interest.","url":"https://dealroom.so/glossary/affiliated-party","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"customer-lists","term":"Customer Lists","group":"Reading the business","definition":"These are records of a business's current and past customers, often including contact information and purchase history. They are a valuable intangible asset representing future revenue potential.","url":"https://dealroom.so/glossary/customer-lists","official_sources":[],"related":[{"slug":"general-intangible","url":"https://dealroom.so/glossary/general-intangible"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"proprietary-software","term":"Proprietary Software","group":"Reading the business","definition":"This is software developed and owned exclusively by the business, giving it a unique competitive advantage. It's a valuable intangible asset, often critical to operations or product delivery.","url":"https://dealroom.so/glossary/proprietary-software","official_sources":[],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"general-intangible","url":"https://dealroom.so/glossary/general-intangible"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"secretary-of-state","term":"Secretary of State","group":"People and paperwork","definition":"This state-level office is responsible for registering businesses, processing UCC filings, and maintaining public records related to corporations and other entities. It's a key touchpoint for legal entity verification.","url":"https://dealroom.so/glossary/secretary-of-state","official_sources":[],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"lien-subordination-agreement","term":"Lien Subordination Agreement","group":"Doing the deal","definition":"This is a legal document where a lienholder agrees to place their claim on an asset below another lienholder's claim in priority. It's crucial for establishing the SBA's first lien position.","url":"https://dealroom.so/glossary/lien-subordination-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"prior-lienholder","url":"https://dealroom.so/glossary/prior-lienholder"},{"slug":"priority-security-interest","url":"https://dealroom.so/glossary/priority-security-interest"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"prior-lienholder","term":"Prior Lienholder","group":"People and paperwork","definition":"This is a lender or creditor who already has a security interest (a lien) on the business's assets. Their claim ranks ahead of new creditors unless a subordination agreement is executed.","url":"https://dealroom.so/glossary/prior-lienholder","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien-subordination-agreement","url":"https://dealroom.so/glossary/lien-subordination-agreement"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"priority-security-interest","term":"Priority Security Interest","group":"The loan itself","definition":"This grants a lender the right to be paid first from the proceeds of selling specific collateral if a borrower defaults. The SBA typically requires a first priority security interest.","url":"https://dealroom.so/glossary/priority-security-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien-subordination-agreement","url":"https://dealroom.so/glossary/lien-subordination-agreement"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"borrower-certifications","term":"Borrower Certifications","group":"People and paperwork","definition":"These are formal statements signed by you, the borrower, affirming the accuracy of information provided and your compliance with specific loan requirements. They carry legal weight.","url":"https://dealroom.so/glossary/borrower-certifications","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"background-checks","term":"Background Checks","group":"People and paperwork","definition":"These are investigations into your personal history, including criminal records, credit history, and sometimes employment, to assess your character and creditworthiness.","url":"https://dealroom.so/glossary/background-checks","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"felony-convictions","url":"https://dealroom.so/glossary/felony-convictions"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"felony-convictions","term":"Felony Convictions","group":"People and paperwork","definition":"These are convictions for serious crimes, typically punishable by imprisonment for more than a year. They are a critical disqualifier for SBA loan eligibility.","url":"https://dealroom.so/glossary/felony-convictions","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"background-checks","url":"https://dealroom.so/glossary/background-checks"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"misdemeanor","url":"https://dealroom.so/glossary/misdemeanor"}]},{"slug":"termination-clauses","term":"Termination Clauses","group":"Doing the deal","definition":"These clauses define conditions under which a contract, like an LOI or purchase agreement, can be ended. As a buyer, understand these to know when you can walk away from a deal without penalty or when the seller can.","url":"https://dealroom.so/glossary/termination-clauses","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"underground-storage-tanks","term":"Underground Storage Tanks","group":"Reading the business","definition":"Underground Storage Tanks (USTs) are buried tanks used to store hazardous substances, primarily petroleum. They pose environmental risks and significant potential cleanup costs if they leak, which you, as the buyer, could inherit.","url":"https://dealroom.so/glossary/underground-storage-tanks","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"senior-position","term":"Senior Position","group":"The loan itself","definition":"This describes a lender's priority claim on a business's assets if the business defaults. As the SBA 7(a) lender typically holds a senior position, they get paid back before other creditors.","url":"https://dealroom.so/glossary/senior-position","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"conventional-working-capital-line-of-credit","term":"Conventional Working Capital Line of Credit","group":"The loan itself","definition":"This is a flexible loan that businesses use to cover day-to-day operational expenses or short-term cash flow gaps. Unlike an SBA loan, it's typically provided by a traditional bank without an SBA guarantee.","url":"https://dealroom.so/glossary/conventional-working-capital-line-of-credit","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"commercially-reasonable-efforts","term":"Commercially Reasonable Efforts","group":"Doing the deal","definition":"This is a legal standard requiring parties to a contract to make genuine, good-faith efforts to fulfill their obligations without going to extreme lengths or incurring unreasonable costs. It protects both buyer and seller.","url":"https://dealroom.so/glossary/commercially-reasonable-efforts","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"witness-signature","term":"Witness Signature","group":"People and paperwork","definition":"A signature from a third party who observes the signing of a document by the principal parties. It verifies the identity of the signers and that they signed willingly.","url":"https://dealroom.so/glossary/witness-signature","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"undisclosed-affiliations","term":"Undisclosed Affiliations","group":"People and paperwork","definition":"These are business or personal relationships that exist but are not revealed, potentially impacting the deal's fairness, eligibility, or terms. The SBA is very strict about identifying all affiliations.","url":"https://dealroom.so/glossary/undisclosed-affiliations","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"related-entities","url":"https://dealroom.so/glossary/related-entities"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"management-agreements","term":"Management Agreements","group":"People and paperwork","definition":"These are contracts outlining the terms under which an entity or individual provides management services to another business. They define responsibilities, compensation, and duration.","url":"https://dealroom.so/glossary/management-agreements","official_sources":[],"related":[{"slug":"related-entities","url":"https://dealroom.so/glossary/related-entities"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"related-entities","term":"Related Entities","group":"People and paperwork","definition":"These are businesses or individuals connected by common ownership, control, or family ties. The SBA scrutinizes these relationships closely to determine eligibility and size.","url":"https://dealroom.so/glossary/related-entities","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"undisclosed-affiliations","url":"https://dealroom.so/glossary/undisclosed-affiliations"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"small-loan-threshold","term":"Small Loan Threshold","group":"The loan itself","definition":"This is a specific dollar amount, currently $500,000, that distinguishes smaller SBA 7(a) loans (7(a) Small Loans) from larger ones. Loans below this threshold have streamlined underwriting and collateral requirements.","url":"https://dealroom.so/glossary/small-loan-threshold","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7-a-small-loan","url":"https://dealroom.so/glossary/7-a-small-loan"},{"slug":"sbss-score","url":"https://dealroom.so/glossary/sbss-score"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"financial-statement-review","term":"Financial Statement Review","group":"Reading the business","definition":"A limited assurance engagement by an accountant that provides some comfort that financial statements are free from material misstatement. It's less thorough than an audit but more detailed than a compilation.","url":"https://dealroom.so/glossary/financial-statement-review","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"certificate-of-birth-abroad","term":"Certificate of Birth Abroad","group":"People and paperwork","definition":"This is an official document issued by the U.S. Department of State to U.S. citizens born outside the United States. It serves as proof of U.S. citizenship.","url":"https://dealroom.so/glossary/certificate-of-birth-abroad","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"sba-504-loan-program","term":"SBA 504 Loan Program","group":"The loan itself","definition":"This SBA program provides long-term, fixed-rate financing for major fixed assets like real estate or machinery. It's designed to promote economic development and job creation.","url":"https://dealroom.so/glossary/sba-504-loan-program","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"}]},{"slug":"disaster-loan","term":"Disaster Loan","group":"The loan itself","definition":"These are direct loans from the SBA to help businesses and individuals recover from declared disasters. They are separate from the 7(a) and 504 programs.","url":"https://dealroom.so/glossary/disaster-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"legal-permanent-resident","term":"Legal Permanent Resident","aka":"LPR","group":"People and paperwork","definition":"A non-US citizen who has been granted the right to live permanently in the US. For an SBA loan, LPR status is a common way for non-citizens to meet the citizenship eligibility requirement.","url":"https://dealroom.so/glossary/legal-permanent-resident","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"eligibility-rule","url":"https://dealroom.so/glossary/eligibility-rule"}]},{"slug":"gross-income","term":"Gross Income","group":"Reading the business","definition":"The total revenue a business generates from all sources before any expenses, taxes, or deductions. It's the top line of the Profit and Loss Statement and shows the business's total sales.","url":"https://dealroom.so/glossary/gross-income","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"tax-exempt-status","term":"Tax-Exempt Status","group":"Reading the business","definition":"A legal designation, usually for non-profit organizations, that exempts them from paying certain federal, state, or local taxes. This status prevents the business from being eligible for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/tax-exempt-status","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"eligibility-rule","url":"https://dealroom.so/glossary/eligibility-rule"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"tribal-enterprise","term":"Tribal Enterprise","group":"Reading the business","definition":"A business owned and operated by a federally recognized Native American tribe or tribal organization. These enterprises can be eligible for SBA 7(a) loans, subject to specific rules.","url":"https://dealroom.so/glossary/tribal-enterprise","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"eligibility-rule","url":"https://dealroom.so/glossary/eligibility-rule"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"seasoning","term":"Seasoning","group":"Reading the business","definition":"Refers to the length of time a business has been in operation or the period funds have been held in an account. Lenders prefer businesses with a longer operating history and require buyer funds to be \"seasoned.\"","url":"https://dealroom.so/glossary/seasoning","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"round-tripped","url":"https://dealroom.so/glossary/round-tripped"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"collection-action","term":"Collection Action","group":"The loan itself","definition":"Steps taken by a lender or creditor to recover money owed when a borrower fails to make payments. For SBA loans, this can lead to serious consequences, including the SBA \"calling\" its guaranty.","url":"https://dealroom.so/glossary/collection-action","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"administrative-cost","term":"Administrative Cost","group":"Reading the business","definition":"Expenses related to the general management and overhead of a business, not directly tied to producing goods or services. Examples include office rent, salaries for administrative staff, and utilities.","url":"https://dealroom.so/glossary/administrative-cost","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"loan-application","term":"Loan Application","group":"People and paperwork","definition":"The formal request submitted to a lender for financing, detailing the borrower's financial information, business plan, and project costs. It's the primary document initiating the SBA loan process.","url":"https://dealroom.so/glossary/loan-application","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"eligibility-rule","term":"Eligibility Rule","group":"The loan itself","definition":"Specific criteria established by the SBA that both the borrower and the business must meet to qualify for a 7(a) loan. These rules cover everything from business type to owner citizenship.","url":"https://dealroom.so/glossary/eligibility-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"credit-elsewhere-test","url":"https://dealroom.so/glossary/credit-elsewhere-test"}]},{"slug":"loan-committee","term":"Loan Committee","group":"People and paperwork","definition":"A group within a lending institution responsible for reviewing and approving or denying loan applications, especially larger or more complex ones like SBA 7(a) acquisitions.","url":"https://dealroom.so/glossary/loan-committee","official_sources":[],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-policy","url":"https://dealroom.so/glossary/credit-policy"},{"slug":"eligibility-rule","url":"https://dealroom.so/glossary/eligibility-rule"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"}]},{"slug":"register-the-guaranty","term":"Register the Guaranty","group":"Doing the deal","definition":"The process by which the SBA formally acknowledges and records its commitment to guarantee a portion of an approved 7(a) loan. This happens after the loan closing.","url":"https://dealroom.so/glossary/register-the-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"}]},{"slug":"credit-policy","term":"Credit Policy","group":"The loan itself","definition":"A lender's internal guidelines and standards for evaluating borrower creditworthiness, managing risk, and approving loans. These often go beyond the SBA's minimum requirements.","url":"https://dealroom.so/glossary/credit-policy","official_sources":[],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"eligibility-rule","url":"https://dealroom.so/glossary/eligibility-rule"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"personal-credit","term":"Personal Credit","group":"Your money in the deal","definition":"Your individual credit history and score, reflecting your past ability to manage debt. This is a critical factor in qualifying for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/personal-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"startup-cost","term":"Startup Cost","group":"Reading the business","definition":"Expenses incurred before a business officially begins operations. In an acquisition, this typically refers to initial investments needed to get the newly acquired business running or to implement immediate changes.","url":"https://dealroom.so/glossary/startup-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"}]},{"slug":"fixed-asset-purchase","term":"Fixed Asset Purchase","group":"Reading the business","definition":"This is when you buy long-term physical assets like equipment or real estate, not inventory. For a buyer, these are key to the business's operational capacity and future value.","url":"https://dealroom.so/glossary/fixed-asset-purchase","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"purchase-of-land","url":"https://dealroom.so/glossary/purchase-of-land"},{"slug":"improvement","url":"https://dealroom.so/glossary/improvement"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"purchase-of-land","term":"Purchase of Land","group":"Reading the business","definition":"Buying the ground itself, separate from any buildings on it. This is a significant asset that can serve as collateral and impact your occupancy costs.","url":"https://dealroom.so/glossary/purchase-of-land","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fixed-asset-purchase","url":"https://dealroom.so/glossary/fixed-asset-purchase"},{"slug":"improvement","url":"https://dealroom.so/glossary/improvement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"improvement","term":"Improvement","group":"Reading the business","definition":"Enhancements made to land or buildings that increase their value or utility. Buyers care because these additions can boost efficiency or attract more customers, directly impacting future cash flow.","url":"https://dealroom.so/glossary/improvement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fixed-asset-purchase","url":"https://dealroom.so/glossary/fixed-asset-purchase"},{"slug":"purchase-of-land","url":"https://dealroom.so/glossary/purchase-of-land"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"occupancy-period","term":"Occupancy Period","group":"Reading the business","definition":"The amount of time you, as the buyer, plan to use the purchased property for your business operations. This period is crucial for evaluating lease terms or real estate investment.","url":"https://dealroom.so/glossary/occupancy-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"short-term-asset","term":"Short-Term Asset","group":"Reading the business","definition":"Assets expected to be converted to cash, used up, or sold within one year, like inventory or accounts receivable. These are vital for a business's daily operations and liquidity.","url":"https://dealroom.so/glossary/short-term-asset","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"ownership-share","term":"Ownership Share","group":"People and paperwork","definition":"The percentage of a company that an individual or entity owns. This determines control, profit distribution, and liability, directly impacting your role and return on investment.","url":"https://dealroom.so/glossary/ownership-share","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"principal-individual","url":"https://dealroom.so/glossary/principal-individual"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"personal-funds","term":"Personal Funds","group":"Your money in the deal","definition":"Money you personally own and contribute to the business acquisition. Lenders scrutinize the source to ensure it's truly yours and unencumbered.","url":"https://dealroom.so/glossary/personal-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"}]},{"slug":"transfer-of-ownership","term":"Transfer of Ownership","group":"Doing the deal","definition":"The legal process of changing who holds the title or equity in a business. This is the core event of an acquisition, making you the new legal owner.","url":"https://dealroom.so/glossary/transfer-of-ownership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"principal-individual","term":"Principal (Individual)","group":"People and paperwork","definition":"Any individual owning 20% or more of the business, or who holds a key management role. These individuals are heavily scrutinized by the SBA due to their influence and required personal guarantees.","url":"https://dealroom.so/glossary/principal-individual","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ownership-share","url":"https://dealroom.so/glossary/ownership-share"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"discharged-bankruptcy","term":"Discharged (Bankruptcy)","group":"People and paperwork","definition":"A legal release from most debts after a bankruptcy proceeding. 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This is a red flag for SBA lenders, as it indicates past financial distress.","url":"https://dealroom.so/glossary/chapter-13-bankruptcy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"bankruptcy","url":"https://dealroom.so/glossary/bankruptcy"},{"slug":"discharged-bankruptcy","url":"https://dealroom.so/glossary/discharged-bankruptcy"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"tax-base","term":"Tax Base","group":"Reading the business","definition":"The total amount of assets, income, or transactions subject to taxation. For a buyer, understanding the business's tax base helps predict future tax liabilities and overall profitability.","url":"https://dealroom.so/glossary/tax-base","official_sources":[],"related":[{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"for-profit-status","term":"For-Profit Status","group":"Reading the business","definition":"A business organized to earn profits for its owners. This status is a fundamental eligibility requirement for most commercial loans, including SBA 7(a).","url":"https://dealroom.so/glossary/for-profit-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"eligibility-screening","url":"https://dealroom.so/glossary/eligibility-screening"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"eligibility-screening","term":"Eligibility Screening","group":"Doing the deal","definition":"The initial process where a lender checks if a business and its owners meet the basic requirements for an SBA loan. This is your first hurdle to clear in the loan application.","url":"https://dealroom.so/glossary/eligibility-screening","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"for-profit-status","url":"https://dealroom.so/glossary/for-profit-status"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"criminal-record","term":"Criminal Record","group":"People and paperwork","definition":"A history of certain criminal offenses can make you ineligible for an SBA loan. Lenders check this during underwriting to assess your character.","url":"https://dealroom.so/glossary/criminal-record","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantor","url":"https://dealroom.so/glossary/personal-guarantor"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"financial-misconduct","term":"Financial Misconduct","group":"People and paperwork","definition":"This refers to unethical or illegal actions involving money, like fraud or embezzlement. It's a major red flag for SBA lenders, signaling poor character and risk.","url":"https://dealroom.so/glossary/financial-misconduct","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"criminal-record","url":"https://dealroom.so/glossary/criminal-record"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"interest-income","term":"Interest Income","group":"Reading the business","definition":"This is money a business earns from holding cash in interest-bearing accounts or making short-term investments. For most small businesses, it's usually a minor revenue stream.","url":"https://dealroom.so/glossary/interest-income","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"encumbered","term":"Encumbered","group":"The loan itself","definition":"An asset is encumbered when it has a legal claim, like a lien, against it, meaning its ownership is restricted until the debt is satisfied. Lenders avoid encumbered collateral.","url":"https://dealroom.so/glossary/encumbered","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"seller-financed-portion","term":"Seller-Financed Portion","group":"Your money in the deal","definition":"This is a portion of the purchase price the seller agrees to lend to the buyer, paid back over time. It's often required by the SBA to show the seller's continued interest in the business's success.","url":"https://dealroom.so/glossary/seller-financed-portion","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"fixed-or-variable-spread","term":"Fixed or Variable Spread","group":"The loan itself","definition":"This refers to whether the interest rate markup above a benchmark (like Prime) stays constant or can change over the loan's term. It directly impacts your monthly payments.","url":"https://dealroom.so/glossary/fixed-or-variable-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"benchmark","url":"https://dealroom.so/glossary/benchmark"}]},{"slug":"benchmark","term":"Benchmark","group":"Reading the business","definition":"A benchmark is a standard or point of reference against which something can be measured or compared. In business, it helps assess performance relative to industry peers.","url":"https://dealroom.so/glossary/benchmark","official_sources":[],"related":[{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"prime-rate","url":"https://dealroom.so/glossary/prime-rate"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"closing-costs","term":"Closing Costs","group":"Doing the deal","definition":"These are fees and expenses incurred to finalize a business acquisition and loan. They include legal fees, appraisal costs, and SBA guaranty fees.","url":"https://dealroom.so/glossary/closing-costs","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"delegation-of-authority","term":"Delegation of Authority","group":"People and paperwork","definition":"This is when the SBA authorizes certain lenders (PLP lenders) to make final loan approval decisions without prior SBA review. It speeds up the loan process significantly.","url":"https://dealroom.so/glossary/delegation-of-authority","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"repair","term":"Repair","group":"Doing the deal","definition":"This refers to fixing physical deficiencies or damage to business assets or property. For an acquisition, significant repairs might impact the valuation or loan terms.","url":"https://dealroom.so/glossary/repair","official_sources":[],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"denial-of-the-guaranty","term":"Denial of the Guaranty","group":"The loan itself","definition":"This occurs when the SBA refuses to honor its promise to cover a portion of a defaulted loan. This happens if the lender didn't follow SBA rules.","url":"https://dealroom.so/glossary/denial-of-the-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"}]},{"slug":"hard-asset","term":"Hard Asset","group":"Reading the business","definition":"These are tangible assets, like real estate, machinery, or inventory, that have a physical form and can be valued. They are often strong collateral for loans.","url":"https://dealroom.so/glossary/hard-asset","official_sources":[],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"personal-guarantor","term":"Personal Guarantor","group":"People and paperwork","definition":"This is an individual who promises to repay a business loan if the business defaults. All owners with 20% or more equity are typically required to be one.","url":"https://dealroom.so/glossary/personal-guarantor","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"equity-contribution","url":"https://dealroom.so/glossary/equity-contribution"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"equity-contribution","term":"Equity Contribution","group":"Your money in the deal","definition":"This is the money you, the buyer, put into the deal from your own funds. It's your \"skin in the game\" and a key requirement for an SBA loan.","url":"https://dealroom.so/glossary/equity-contribution","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"down-payment","url":"https://dealroom.so/glossary/down-payment"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"financial-forecasts","term":"Financial Forecasts","group":"Reading the business","definition":"These are projections of a business's future financial performance, like revenue and profit. Buyers care because they show the potential for growth and debt repayment capacity, crucial for underwriting your loan.","url":"https://dealroom.so/glossary/financial-forecasts","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"packaging-fees","term":"Packaging Fees","group":"Doing the deal","definition":"These are fees charged by a loan packager or broker to help you prepare and submit your SBA loan application. Buyers care because these are part of your total closing costs and can impact your out-of-pocket expenses.","url":"https://dealroom.so/glossary/packaging-fees","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"criminal-conviction","term":"Criminal Conviction","group":"People and paperwork","definition":"This refers to a formal declaration by a court that an individual is guilty of a criminal offense. Buyers care because certain convictions can make you ineligible for an SBA loan, impacting your ability to secure financing.","url":"https://dealroom.so/glossary/criminal-conviction","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"criminal-charge","url":"https://dealroom.so/glossary/criminal-charge"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"character-and-background-checks","term":"Character and Background Checks","group":"People and paperwork","definition":"These are investigations into your personal history, including credit, criminal, and sometimes educational or employment records. Buyers care because lenders conduct these to assess your eligibility and trustworthiness for an SBA loan.","url":"https://dealroom.so/glossary/character-and-background-checks","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"criminal-conviction","url":"https://dealroom.so/glossary/criminal-conviction"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"debt-structure","term":"Debt Structure","group":"Reading the business","definition":"This refers to the mix of debt a business carries, including different types of loans, interest rates, and repayment terms. Buyers care because it impacts the business's financial health, cash flow, and ability to take on new debt.","url":"https://dealroom.so/glossary/debt-structure","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"commercial-appraisal","term":"Commercial Appraisal","group":"Reading the business","definition":"This is a professional assessment of the market value of commercial real estate or business assets. Buyers care because it determines the collateral value available to secure your SBA loan, ensuring the lender has adequate security.","url":"https://dealroom.so/glossary/commercial-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"civil-penalty","term":"Civil Penalty","group":"People and paperwork","definition":"This is a non-criminal financial punishment imposed by a government agency for violating a law or regulation. Buyers care because undisclosed or significant civil penalties can reflect poorly on a business or individual's compliance history and potentially affect SBA eligibility.","url":"https://dealroom.so/glossary/civil-penalty","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"character-and-background-checks","url":"https://dealroom.so/glossary/character-and-background-checks"},{"slug":"criminal-charge","url":"https://dealroom.so/glossary/criminal-charge"},{"slug":"omission-of-material-fact","url":"https://dealroom.so/glossary/omission-of-material-fact"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"criminal-charge","term":"Criminal Charge","group":"People and paperwork","definition":"This is an accusation by law enforcement that someone has committed a crime, which may or may not lead to a conviction. Buyers care because pending charges or recent dismissals related to fraud or dishonesty can still impact SBA loan eligibility.","url":"https://dealroom.so/glossary/criminal-charge","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"criminal-conviction","url":"https://dealroom.so/glossary/criminal-conviction"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"misdemeanor","url":"https://dealroom.so/glossary/misdemeanor"},{"slug":"omission-of-material-fact","url":"https://dealroom.so/glossary/omission-of-material-fact"}]},{"slug":"omission-of-material-fact","term":"Omission of Material Fact","group":"People and paperwork","definition":"This means intentionally failing to disclose important information that would influence a decision, like a loan approval. Buyers care because it's considered fraud by the SBA and can lead to severe penalties, including loan denial or revocation.","url":"https://dealroom.so/glossary/omission-of-material-fact","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fraud-charge","url":"https://dealroom.so/glossary/fraud-charge"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"penalty-of-perjury","url":"https://dealroom.so/glossary/penalty-of-perjury"}]},{"slug":"fraud-charge","term":"Fraud Charge","group":"People and paperwork","definition":"This is a criminal accusation of intentional deception for personal gain, especially financial. Buyers care because a fraud charge, even if not a conviction, is a major red flag for SBA lenders and can lead to immediate loan ineligibility.","url":"https://dealroom.so/glossary/fraud-charge","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"criminal-charge","url":"https://dealroom.so/glossary/criminal-charge"},{"slug":"criminal-conviction","url":"https://dealroom.so/glossary/criminal-conviction"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"omission-of-material-fact","url":"https://dealroom.so/glossary/omission-of-material-fact"}]},{"slug":"liquidate","term":"Liquidate","group":"Doing the deal","definition":"To liquidate means to sell off assets to convert them into cash, often to pay off debts. Buyers care because in a worst-case scenario, if the business fails, collateral assets would be liquidated to repay your SBA loan.","url":"https://dealroom.so/glossary/liquidate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"citizenship-requirement","term":"Citizenship Requirement","group":"People and paperwork","definition":"This refers to the SBA's rule that at least one owner of the applicant business must be a U.S. citizen or Qualified Alien. Buyers care because it's a fundamental eligibility criterion for obtaining an SBA loan.","url":"https://dealroom.so/glossary/citizenship-requirement","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"key-management-personnel","term":"Key Management Personnel","group":"People and paperwork","definition":"These are individuals critical to the operation and success of a business, often including owners, officers, and top executives. Buyers care because the SBA assesses their character and requires life insurance for those vital to loan repayment.","url":"https://dealroom.so/glossary/key-management-personnel","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"character-and-background-checks","url":"https://dealroom.so/glossary/character-and-background-checks"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"total-outstanding-principal","term":"Total Outstanding Principal","group":"The loan itself","definition":"This is the remaining amount of money borrowed on a loan, not including interest. Buyers care because it represents the actual amount still owed on any existing debt that you might assume or refinance.","url":"https://dealroom.so/glossary/total-outstanding-principal","official_sources":[],"related":[{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"maximum-aggregate-loan-amount","term":"Maximum Aggregate Loan Amount","group":"The loan itself","definition":"This is the highest total amount of SBA 7(a) loans a single borrower or group of affiliated businesses can have outstanding at one time. It's a hard cap on your total SBA financing.","url":"https://dealroom.so/glossary/maximum-aggregate-loan-amount","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"small-business-size-standards","url":"https://dealroom.so/glossary/small-business-size-standards"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"13-cfr-part-121","term":"13 CFR Part 121","aka":"Code of Federal Regulations Part 121","group":"People and paperwork","definition":"This is the section of federal regulations that defines \"small business\" for various government programs, including SBA loans. It sets the rules for how the SBA determines if a business is eligible based on size.","url":"https://dealroom.so/glossary/13-cfr-part-121","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"small-business-size-standards","url":"https://dealroom.so/glossary/small-business-size-standards"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"financial-impropriety","term":"Financial Impropriety","group":"People and paperwork","definition":"This refers to dishonest or unethical financial conduct, like fraud, embezzlement, or misrepresentation, which can disqualify a borrower or business from an SBA loan. It indicates a lack of good character.","url":"https://dealroom.so/glossary/financial-impropriety","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"non-cash-contribution","term":"Non-Cash Contribution","group":"Your money in the deal","definition":"This is an asset, like equipment or real estate, that you contribute to the business instead of cash, counting towards your required equity injection. The SBA allows it under strict conditions.","url":"https://dealroom.so/glossary/non-cash-contribution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"small-business-size-standards","term":"Small Business Size Standards","group":"People and paperwork","definition":"These are specific criteria, usually based on average annual revenue or number of employees, that the SBA uses to define if a business is \"small\" and eligible for its programs. They vary by industry.","url":"https://dealroom.so/glossary/small-business-size-standards","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"13-cfr-part-121","url":"https://dealroom.so/glossary/13-cfr-part-121"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"eligibility","url":"https://dealroom.so/glossary/eligibility"}]},{"slug":"formation-document","term":"Formation Document","group":"People and paperwork","definition":"This is the legal paperwork filed with a state to officially create a business entity, like Articles of Incorporation for a corporation or Articles of Organization for an LLC. It establishes the business's legal existence.","url":"https://dealroom.so/glossary/formation-document","official_sources":[],"related":[{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"partnership-agreement","term":"Partnership Agreement","group":"People and paperwork","definition":"This is a legal contract outlining the rights, responsibilities, and profit/loss sharing among partners in a partnership business. It's crucial for managing co-ownership.","url":"https://dealroom.so/glossary/partnership-agreement","official_sources":[],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"formation-document","url":"https://dealroom.so/glossary/formation-document"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"private-bridge-loan","term":"Private Bridge Loan","group":"The loan itself","definition":"This is a short-term, high-interest loan from a private lender, used to cover immediate funding gaps until a more permanent financing solution, like an SBA loan, closes. It's a temporary fix.","url":"https://dealroom.so/glossary/private-bridge-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"fully-amortizing-payment","term":"Fully Amortizing Payment","group":"The loan itself","definition":"This is a loan payment schedule where each payment includes both principal and interest, designed to completely pay off the loan by the end of its term. You won't have a large lump sum due at the end.","url":"https://dealroom.so/glossary/fully-amortizing-payment","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"balloon-payment","url":"https://dealroom.so/glossary/balloon-payment"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"absentee-ownership","term":"Absentee Ownership","group":"Reading the business","definition":"This describes a business where the owner is not actively involved in daily operations, often relying on managers. It can indicate a business's ability to run without the owner's constant presence.","url":"https://dealroom.so/glossary/absentee-ownership","official_sources":[],"related":[{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"turnaround-acquisition","term":"Turnaround Acquisition","group":"Reading the business","definition":"This is buying a business that is underperforming or in distress with the intent to revitalize it and improve its profitability. It's a high-risk, high-reward strategy.","url":"https://dealroom.so/glossary/turnaround-acquisition","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"assets-liabilities-and-net-worth","term":"Assets, Liabilities, and Net Worth","group":"Reading the business","definition":"These are the fundamental components of a balance sheet: assets are what the business owns, liabilities are what it owes, and net worth (or equity) is the difference. They show a company's financial position at a point in time.","url":"https://dealroom.so/glossary/assets-liabilities-and-net-worth","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidity-of-assets","url":"https://dealroom.so/glossary/liquidity-of-assets"}]},{"slug":"liquidity-of-assets","term":"Liquidity of Assets","group":"Reading the business","definition":"This refers to how easily an asset can be converted into cash without significant loss in value. Highly liquid assets, like cash or marketable securities, are easy to sell quickly.","url":"https://dealroom.so/glossary/liquidity-of-assets","official_sources":[],"related":[{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"renovations-or-leasehold-improvements","term":"Renovations or Leasehold Improvements","group":"Reading the business","definition":"These are modifications made to a leased property to customize it for the business's needs. Renovations are general upgrades, while leasehold improvements are specific to a tenant.","url":"https://dealroom.so/glossary/renovations-or-leasehold-improvements","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"option-to-renew","term":"Option to renew","group":"Reading the business","definition":"This clause in a lease gives you the right, but not the obligation, to extend the lease term under specified conditions. As a buyer, you need to know if you can stay in the business location long-term.","url":"https://dealroom.so/glossary/option-to-renew","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"seasonal-fluctuation","term":"Seasonal fluctuation","group":"Reading the business","definition":"This refers to predictable ups and downs in a business's revenue or expenses based on the time of year. Buyers must understand how seasonality impacts cash flow and working capital.","url":"https://dealroom.so/glossary/seasonal-fluctuation","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"ownership-transition","term":"Ownership transition","group":"Doing the deal","definition":"This is the process of transferring legal and operational control of a business from the seller to the buyer. A smooth transition is vital for business continuity and value preservation.","url":"https://dealroom.so/glossary/ownership-transition","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"environmental-review-costs","term":"Environmental review costs","group":"Doing the deal","definition":"These are expenses for assessing potential environmental hazards on a property, often required by lenders for real estate-backed deals. You pay these to ensure the property is clean and to protect yourself from future liability.","url":"https://dealroom.so/glossary/environmental-review-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"accounting-fees","term":"Accounting fees","group":"Doing the deal","definition":"These are charges for professional accounting services, essential for due diligence, financial statement preparation, and tax planning during an acquisition. They help you verify the business's financials and structure the deal.","url":"https://dealroom.so/glossary/accounting-fees","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"personal-tax-return","url":"https://dealroom.so/glossary/personal-tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"franchise-territory","term":"Franchise territory","group":"Reading the business","definition":"This is the exclusive geographic area granted to a franchisee by the franchisor where they can operate. Understanding your territory protects your business from direct competition from other franchisees.","url":"https://dealroom.so/glossary/franchise-territory","official_sources":[],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"sba-s-franchise-directory","url":"https://dealroom.so/glossary/sba-s-franchise-directory"}]},{"slug":"franchise-fees","term":"Franchise fees","group":"Doing the deal","definition":"These are payments made to the franchisor, typically including an upfront initial fee and ongoing royalties. These are significant costs you must factor into your total project costs.","url":"https://dealroom.so/glossary/franchise-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"}]},{"slug":"sba-s-franchise-directory","term":"SBA's Franchise Directory","group":"People and paperwork","definition":"This is an online list of franchise systems pre-approved by the SBA, simplifying the eligibility process for 7(a) loans. If a franchise is listed, it means the SBA has already reviewed its agreement terms.","url":"https://dealroom.so/glossary/sba-s-franchise-directory","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"performing-loan","term":"Performing loan","group":"The loan itself","definition":"This is a loan where the borrower is making all scheduled principal and interest payments on time. As a buyer, your 7(a) loan is expected to be a performing loan from day one.","url":"https://dealroom.so/glossary/performing-loan","official_sources":[],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"extended-maturity","term":"Extended maturity","group":"The loan itself","definition":"This refers to a longer repayment period for a loan, often up to 10 years for a business acquisition or 25 years for real estate. It lowers your monthly payments, improving cash flow.","url":"https://dealroom.so/glossary/extended-maturity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"fee-rate","term":"Fee rate","group":"The loan itself","definition":"This is the percentage used to calculate various fees associated with your SBA 7(a) loan, such as the upfront guaranty fee. It directly impacts your total project costs.","url":"https://dealroom.so/glossary/fee-rate","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"}]},{"slug":"alien-registration-status","term":"Alien registration status","group":"People and paperwork","definition":"This refers to the legal immigration status of non-U.S. citizens applying for an SBA loan. The SBA requires proof of \"Qualified Alien\" status to be eligible.","url":"https://dealroom.so/glossary/alien-registration-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-alien","url":"https://dealroom.so/glossary/qualified-alien"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"business-partnership","term":"Business partnership","group":"People and paperwork","definition":"This is a business structure where two or more individuals agree to share in the profits or losses of a business. It defines ownership, responsibilities, and liability among the partners.","url":"https://dealroom.so/glossary/business-partnership","official_sources":[],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"}]},{"slug":"personal-tax-return","term":"Personal tax return","group":"People and paperwork","definition":"This is the annual filing to the IRS reporting your individual income, deductions, and tax liability. Lenders require these to assess your personal financial health and repayment capacity.","url":"https://dealroom.so/glossary/personal-tax-return","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"ongoing-guaranty-fee","term":"Ongoing guaranty fee","group":"The loan itself","definition":"This is an annual fee paid by your lender to the SBA, passed on to you as part of your loan costs. It ensures the SBA continues to back a portion of your loan, reducing risk for the lender.","url":"https://dealroom.so/glossary/ongoing-guaranty-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"outstanding-guaranteed-principal-balance","url":"https://dealroom.so/glossary/outstanding-guaranteed-principal-balance"},{"slug":"loan-guaranty","url":"https://dealroom.so/glossary/loan-guaranty"},{"slug":"sba-7-a-program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"}]},{"slug":"outstanding-guaranteed-principal-balance","term":"Outstanding guaranteed principal balance","group":"The loan itself","definition":"This is the portion of your loan's remaining principal that the SBA guarantees to your lender. It's the basis for calculating the ongoing guaranty fee you pay.","url":"https://dealroom.so/glossary/outstanding-guaranteed-principal-balance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ongoing-guaranty-fee","url":"https://dealroom.so/glossary/ongoing-guaranty-fee"},{"slug":"loan-guaranty","url":"https://dealroom.so/glossary/loan-guaranty"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"loan-package","term":"Loan package","group":"People and paperwork","definition":"This is the complete set of documents, financial statements, and application forms your lender compiles and submits to the SBA for approval and guaranty. It tells your business's story to the SBA.","url":"https://dealroom.so/glossary/loan-package","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"plp","term":"PLP","aka":"Preferred Lender Program","group":"The loan itself","definition":"PLP lenders have delegated authority from the SBA to approve loans without prior SBA review, significantly speeding up the approval process. This is a major advantage for buyers.","url":"https://dealroom.so/glossary/plp","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"},{"slug":"sba-7-a-program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"}]},{"slug":"guaranteed-loan","term":"Guaranteed loan","group":"The loan itself","definition":"This is a loan where the SBA provides a guaranty to the lender, covering a percentage of the loan if you default. It reduces lender risk, making it easier for small businesses to get financing.","url":"https://dealroom.so/glossary/guaranteed-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-guaranty","url":"https://dealroom.so/glossary/loan-guaranty"},{"slug":"sba-7-a-program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"lien-on-personal-property","term":"Lien on personal property","group":"People and paperwork","definition":"This is a legal claim a lender places on your movable assets, such as equipment, inventory, or accounts receivable, as collateral for your loan. It gives them the right to seize these assets if you default.","url":"https://dealroom.so/glossary/lien-on-personal-property","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"wage-garnishment","term":"Wage garnishment","group":"People and paperwork","definition":"This is a legal procedure where a portion of your wages is withheld by your employer and sent directly to a creditor to satisfy a debt. It's a severe consequence of defaulting on a personal guarantee.","url":"https://dealroom.so/glossary/wage-garnishment","official_sources":[],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"tax-filing","term":"Tax filing","group":"People and paperwork","definition":"This refers to the submission of required tax documents to federal, state, and local authorities. For a business acquisition, you'll need to review the seller's past filings to verify financial performance.","url":"https://dealroom.so/glossary/tax-filing","official_sources":[],"related":[{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"sba-community-advantage","term":"SBA Community Advantage","group":"The loan itself","definition":"This is a specific SBA pilot loan program designed to help small businesses in underserved markets access capital, primarily through mission-driven lenders. It's a subset of the broader 7(a) program.","url":"https://dealroom.so/glossary/sba-community-advantage","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"terms-conditions-eligibility","title":"7(a) Loan Program — Terms, Conditions, and Eligibility","official_url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility","official_label":"View on SBA.gov","authority_tier":5,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/terms-conditions-eligibility"}],"related":[{"slug":"sba-7-a-program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"non-profit-organization","url":"https://dealroom.so/glossary/non-profit-organization"}]},{"slug":"variable-loan","term":"Variable loan","group":"The loan itself","definition":"A loan where the interest rate can change over time, typically tied to an index like the WSJ Prime Rate or Term SOFR, plus a fixed spread. This means your monthly payments can fluctuate.","url":"https://dealroom.so/glossary/variable-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"aging-of-receivables","term":"Aging of receivables","group":"Reading the business","definition":"This is a report that categorizes a business's accounts receivable by the length of time they have been outstanding. It's a key indicator of cash flow health and collection efficiency.","url":"https://dealroom.so/glossary/aging-of-receivables","official_sources":[],"related":[{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"historical-write-off","term":"Historical write-off","group":"Reading the business","definition":"This refers to past debts or assets that a business has deemed uncollectible or without value and removed from its balance sheet. It indicates past losses the business absorbed.","url":"https://dealroom.so/glossary/historical-write-off","official_sources":[],"related":[{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"loan-guaranty","term":"Loan guaranty","aka":"SBA guaranty","group":"The loan itself","definition":"This is the commitment from the SBA to a lender to repay a portion of your loan if you default. It reduces the lender's risk, making it easier for them to approve your business acquisition.","url":"https://dealroom.so/glossary/loan-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranteed-loan","url":"https://dealroom.so/glossary/guaranteed-loan"},{"slug":"sba-7-a-program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"sba-7-a-program","term":"SBA 7(a) program","group":"The loan itself","definition":"This is the Small Business Administration's primary program for providing financial assistance to small businesses, including those acquiring an existing business. It offers government-backed loans through partner lenders.","url":"https://dealroom.so/glossary/sba-7-a-program","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"guaranteed-loan","url":"https://dealroom.so/glossary/guaranteed-loan"},{"slug":"plp","url":"https://dealroom.so/glossary/plp"},{"slug":"sba-community-advantage","url":"https://dealroom.so/glossary/sba-community-advantage"}]},{"slug":"majority-control","term":"Majority control","group":"Reading the business","definition":"When an individual or group owns more than 50% of a business, they have majority control. For a buyer getting an SBA loan, this means they'll be the primary decision-maker and responsible party.","url":"https://dealroom.so/glossary/majority-control","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"}]},{"slug":"compensating-factors","term":"Compensating factors","group":"Reading the business","definition":"These are positive aspects of a loan application that can offset weaker areas, making a borrower or deal more attractive to a lender. They can be crucial for getting approved if your financial profile isn't perfect.","url":"https://dealroom.so/glossary/compensating-factors","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"}]},{"slug":"call-on-the-guaranty","term":"Call on the guaranty","group":"The loan itself","definition":"This is when a lender requests the SBA to honor its promise to pay a portion of a defaulted 7(a) loan. It means the loan has failed, and the SBA is stepping in to cover the guaranteed percentage.","url":"https://dealroom.so/glossary/call-on-the-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"u-s-territories","term":"U.S. territories","group":"People and paperwork","definition":"These are areas like Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands. Businesses in these areas are generally eligible for SBA 7(a) loans just like those in the 50 states.","url":"https://dealroom.so/glossary/u-s-territories","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"}]},{"slug":"seller-note-on-standby","term":"Seller note on standby","group":"Your money in the deal","definition":"This is a portion of the seller financing that is not paid back until the SBA loan is fully repaid, or only paid back with strict limitations. It's often required by the SBA to count towards your equity injection.","url":"https://dealroom.so/glossary/seller-note-on-standby","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"conditions-precedent-to-closing","term":"Conditions precedent to closing","group":"Doing the deal","definition":"These are specific requirements that must be met by both the buyer and seller before the deal can officially close. They protect both parties by ensuring all agreed-upon terms are satisfied.","url":"https://dealroom.so/glossary/conditions-precedent-to-closing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"purchase-agreement","url":"https://dealroom.so/glossary/purchase-agreement"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"capline","term":"CAPLine","group":"The loan itself","definition":"CAPLine is a specific type of SBA 7(a) loan designed to help small businesses meet short-term and cyclical working capital needs. It's not typically used for business acquisitions directly, but can support post-acquisition working capital.","url":"https://dealroom.so/glossary/capline","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"export-working-capital-program-loan","term":"Export Working Capital Program loan","group":"The loan itself","definition":"This is an SBA 7(a) loan specifically for small businesses needing working capital to support their export activities. It helps finance the costs associated with fulfilling international sales.","url":"https://dealroom.so/glossary/export-working-capital-program-loan","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"overleverage","term":"Overleverage","group":"Reading the business","definition":"This occurs when a business takes on too much debt relative to its cash flow or equity, making it difficult to meet debt obligations and increasing its risk of financial distress. As a buyer, you want to avoid this.","url":"https://dealroom.so/glossary/overleverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"debt-to-equity-ratio","url":"https://dealroom.so/glossary/debt-to-equity-ratio"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"financial-leverage","url":"https://dealroom.so/glossary/financial-leverage"}]},{"slug":"net-book-value","term":"Net book value","group":"Reading the business","definition":"This is the value of an asset or a company's total assets less its liabilities, as recorded on its balance sheet. It reflects historical cost less accumulated depreciation, not necessarily market value.","url":"https://dealroom.so/glossary/net-book-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"financial-leverage","term":"Financial leverage","group":"Reading the business","definition":"This is the extent to which a business uses borrowed money (debt) to finance its assets and operations. It can amplify returns but also increases risk if the business can't service the debt.","url":"https://dealroom.so/glossary/financial-leverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"debt-to-equity-ratio","url":"https://dealroom.so/glossary/debt-to-equity-ratio"},{"slug":"overleverage","url":"https://dealroom.so/glossary/overleverage"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"debt-to-equity-ratio","term":"Debt-to-equity ratio","group":"Reading the business","definition":"This financial ratio compares a company's total liabilities to its shareholder equity. It indicates how much debt a business uses to finance its assets relative to the value provided by owners.","url":"https://dealroom.so/glossary/debt-to-equity-ratio","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"financial-leverage","url":"https://dealroom.so/glossary/financial-leverage"},{"slug":"overleverage","url":"https://dealroom.so/glossary/overleverage"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"}]},{"slug":"predatory-lending","term":"Predatory lending","group":"The loan itself","definition":"This refers to lending practices that are unfair, deceptive, or abusive, often targeting vulnerable borrowers with excessive fees, high interest rates, or terms designed to trap them in debt. The SBA 7(a) program has rules to prevent this.","url":"https://dealroom.so/glossary/predatory-lending","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"}]},{"slug":"lender-underwriting","term":"Lender underwriting","group":"Doing the deal","definition":"This is the lender's process of evaluating your loan application and the business's financials to decide if you and the business are creditworthy for an SBA 7(a) loan. It determines if the deal goes forward.","url":"https://dealroom.so/glossary/lender-underwriting","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"funding-disbursement","term":"Funding disbursement","group":"The loan itself","definition":"This is when the lender actually releases the loan money after closing, usually to an escrow account, to pay the seller and other project costs. It's the final step that makes the acquisition happen.","url":"https://dealroom.so/glossary/funding-disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"government-guaranteed","term":"Government-guaranteed","group":"The loan itself","definition":"An SBA 7(a) loan is partly guaranteed by the U.S. government, reducing risk for the lender. This guarantee makes it easier for small businesses to get loans they might not otherwise qualify for.","url":"https://dealroom.so/glossary/government-guaranteed","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"call-of-the-guaranty","url":"https://dealroom.so/glossary/call-of-the-guaranty"}]},{"slug":"overhead","term":"Overhead","group":"Reading the business","definition":"These are the ongoing costs of running a business that aren't directly tied to producing a product or service, like rent, utilities, and administrative salaries. Understanding overhead helps you predict future profitability.","url":"https://dealroom.so/glossary/overhead","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"home-equity","term":"Home equity","group":"Your money in the deal","definition":"This is the portion of your home's value that you actually own, calculated as its market value minus any outstanding mortgage debt. It's often a source of funds for your equity injection.","url":"https://dealroom.so/glossary/home-equity","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"asset-statement","url":"https://dealroom.so/glossary/asset-statement"}]},{"slug":"loan-packager","term":"Loan packager","group":"People and paperwork","definition":"A loan packager is a professional who helps assemble and organize your loan application documents for an SBA lender. They can streamline the process, but they often charge a fee.","url":"https://dealroom.so/glossary/loan-packager","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"non-plp-lender","term":"Non-PLP lender","group":"People and paperwork","definition":"A Non-PLP lender is an SBA-approved lender that does not have \"Preferred Lender Program\" (PLP) status, meaning the SBA must review and approve each loan application. This adds time to the approval process.","url":"https://dealroom.so/glossary/non-plp-lender","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"e-tran-submission","url":"https://dealroom.so/glossary/e-tran-submission"},{"slug":"lender-underwriting","url":"https://dealroom.so/glossary/lender-underwriting"},{"slug":"delegated-authority","url":"https://dealroom.so/glossary/delegated-authority"}]},{"slug":"sales-projection","term":"Sales projection","group":"Reading the business","definition":"This is your forecast of the business's future sales revenue, often based on historical performance and market analysis. Lenders rely on these to assess the business's ability to repay the loan.","url":"https://dealroom.so/glossary/sales-projection","official_sources":[],"related":[{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"}]},{"slug":"fico-liquidcredit","term":"FICO LiquidCredit","group":"Reading the business","definition":"This is a specific FICO credit scoring model often used by lenders to assess the creditworthiness of small businesses and their principals. It helps predict the likelihood of default.","url":"https://dealroom.so/glossary/fico-liquidcredit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"asset-statement","term":"Asset statement","group":"Reading the business","definition":"This is a summary of all your personal assets and liabilities, providing a snapshot of your net worth. Lenders require it to verify your financial strength and ability to make an equity injection.","url":"https://dealroom.so/glossary/asset-statement","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"},{"slug":"brokerage-statement","url":"https://dealroom.so/glossary/brokerage-statement"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"}]},{"slug":"personal-cash-flow","term":"Personal cash flow","group":"Reading the business","definition":"This refers to the money you have coming in and going out personally each month. Lenders assess it to ensure you can cover personal expenses and still contribute to the business if needed.","url":"https://dealroom.so/glossary/personal-cash-flow","official_sources":[],"related":[{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"federal-grant","term":"Federal grant","group":"The loan itself","definition":"A federal grant is money given by the government that does not need to be repaid, typically for specific projects or purposes. It is distinct from an SBA loan, which is debt.","url":"https://dealroom.so/glossary/federal-grant","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"research-and-development","term":"Research and development","group":"Reading the business","definition":"This refers to activities a business undertakes to innovate, develop new products or services, or improve existing ones. It's often an expense line item that can impact current profitability but drive future growth.","url":"https://dealroom.so/glossary/research-and-development","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"}]},{"slug":"cost-of-compliance","term":"Cost of compliance","group":"Reading the business","definition":"This is the expense a business incurs to meet regulations, laws, and industry standards. It can include fees, audits, and staff time, and directly impacts profitability.","url":"https://dealroom.so/glossary/cost-of-compliance","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"readily-marketable-asset","term":"Readily marketable asset","group":"Reading the business","definition":"An asset easily converted to cash at its fair market value. For an SBA loan, lenders look for these as strong collateral.","url":"https://dealroom.so/glossary/readily-marketable-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"net-equity","term":"Net equity","group":"Your money in the deal","definition":"This is the value of your ownership stake in the business after subtracting all liabilities. It represents the true value you own.","url":"https://dealroom.so/glossary/net-equity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"perfecting-lien","term":"Perfecting lien","group":"Doing the deal","definition":"This is the legal process of establishing a lender's security interest in specific collateral, making it enforceable against third parties. It protects the lender's claim.","url":"https://dealroom.so/glossary/perfecting-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"mortgage-deed","url":"https://dealroom.so/glossary/mortgage-deed"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"title-company","term":"Title company","group":"People and paperwork","definition":"A third-party company that ensures clear legal ownership of real estate and facilitates its transfer, often handling escrow funds.","url":"https://dealroom.so/glossary/title-company","official_sources":[],"related":[{"slug":"mortgage-deed","url":"https://dealroom.so/glossary/mortgage-deed"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"mortgage-deed","term":"Mortgage deed","group":"People and paperwork","definition":"A legal document that pledges real estate as collateral for a loan, giving the lender the right to foreclose if the borrower defaults.","url":"https://dealroom.so/glossary/mortgage-deed","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"100-collateralization","term":"100% collateralization","group":"The loan itself","definition":"This means the total value of assets pledged as collateral equals or exceeds the loan amount. The SBA requires this whenever possible.","url":"https://dealroom.so/glossary/100-collateralization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"finished-goods-inventory","term":"Finished goods inventory","group":"Reading the business","definition":"These are products fully manufactured and ready for sale. 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estate.","url":"https://dealroom.so/glossary/environmental-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal 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It's a distinct revenue stream with specific rules.","url":"https://dealroom.so/glossary/government-contracting","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"interest","term":"Interest","group":"The loan itself","definition":"The cost of borrowing money, expressed as a percentage of the principal loan amount, paid periodically by the borrower to the lender.","url":"https://dealroom.so/glossary/interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"}]},{"slug":"capacity-to-repay","term":"Capacity to Repay","group":"Reading the business","definition":"This is the business's ability to generate enough cash flow to cover all its debt payments, including your new SBA loan. 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For you, it's the primary way to fund your small business acquisition.","url":"https://dealroom.so/glossary/debt-financing-program","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"maximum-sba-7-a-loan-amount","url":"https://dealroom.so/glossary/maximum-sba-7-a-loan-amount"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"equity-investment","term":"Equity Investment","group":"Your money in the deal","definition":"This is the money you personally put into the deal. 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It's a key asset, showing revenue stability and potential for future growth.","url":"https://dealroom.so/glossary/client-list","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"acquisition-cost","term":"Acquisition Cost","group":"Doing the deal","definition":"This is the total price you pay to buy a business, including the purchase price, working capital, and all associated fees. 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It's a subjective but crucial factor in getting an SBA loan approved.","url":"https://dealroom.so/glossary/borrower-character","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"full-credit-report","url":"https://dealroom.so/glossary/full-credit-report"},{"slug":"personal-loan-default","url":"https://dealroom.so/glossary/personal-loan-default"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"maximum-sba-7-a-loan-amount","term":"Maximum SBA 7(a) Loan Amount","group":"The loan itself","definition":"This is the largest loan amount the SBA will guarantee under its 7(a) program. Currently, it's $5 million, which sets the upper limit for your acquisition financing.","url":"https://dealroom.so/glossary/maximum-sba-7-a-loan-amount","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"debt-financing-program","url":"https://dealroom.so/glossary/debt-financing-program"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"lien-on-accounts-receivable","term":"Lien on Accounts Receivable","group":"The loan itself","definition":"This is a legal claim a lender places on the money owed to the business by its customers. It serves as collateral for your loan, giving the lender rights to these assets if you default.","url":"https://dealroom.so/glossary/lien-on-accounts-receivable","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"equity-gap","term":"Equity Gap","group":"Your money in the deal","definition":"This is the difference between the total acquisition cost and the maximum loan amount you can secure. It's the portion of the deal you need to cover with your own funds or other non-loan sources.","url":"https://dealroom.so/glossary/equity-gap","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"}]},{"slug":"pre-qualification-process","term":"Pre-qualification process","group":"Doing the deal","definition":"This is an initial check by a lender to see if you and the business broadly meet SBA loan requirements. 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It suggests you've found a bargain, often due to a distressed seller or unique market conditions.","url":"https://dealroom.so/glossary/negative-goodwill","official_sources":[],"related":[{"slug":"bargain-purchase","url":"https://dealroom.so/glossary/bargain-purchase"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"bargain-purchase","term":"Bargain purchase","group":"Doing the deal","definition":"A bargain purchase happens when you acquire a business for a price significantly below its fair market value. This can result from a motivated seller, market inefficiencies, or unique buyer advantages.","url":"https://dealroom.so/glossary/bargain-purchase","official_sources":[],"related":[{"slug":"negative-goodwill","url":"https://dealroom.so/glossary/negative-goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"third-party-agent","term":"Third-party agent","group":"People and paperwork","definition":"A third-party agent is any person or entity, other than the borrower or lender, who helps with the loan process, like a broker or consultant. They often charge fees for their services.","url":"https://dealroom.so/glossary/third-party-agent","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"broker-fee","url":"https://dealroom.so/glossary/broker-fee"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"}]},{"slug":"broker-fee","term":"Broker fee","group":"Doing the deal","definition":"This is the compensation paid to a business broker or M&A advisor for facilitating the sale of a business. It's typically a percentage of the sale price.","url":"https://dealroom.so/glossary/broker-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"third-party-agent","url":"https://dealroom.so/glossary/third-party-agent"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"}]},{"slug":"covenant","term":"Covenant","group":"The loan itself","definition":"Covenants are promises or conditions in your loan agreement that you must uphold throughout the loan term. They can be financial, like maintaining a certain debt service coverage ratio, or operational, like providing financial statements regularly.","url":"https://dealroom.so/glossary/covenant","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"credit-approval","term":"Credit approval","group":"Doing the deal","definition":"This is the lender's official decision to approve your loan application based on their assessment of your creditworthiness and the business's financial health. It's a critical step towards closing.","url":"https://dealroom.so/glossary/credit-approval","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"pre-qualification-process","url":"https://dealroom.so/glossary/pre-qualification-process"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"attorney-fee","term":"Attorney fee","group":"Doing the deal","definition":"These are the costs you pay for legal services related to the business acquisition, including drafting documents, reviewing contracts, and ensuring compliance.","url":"https://dealroom.so/glossary/attorney-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"legal-due-diligence","url":"https://dealroom.so/glossary/legal-due-diligence"},{"slug":"contract-term","url":"https://dealroom.so/glossary/contract-term"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"intangible-value","term":"Intangible value","group":"Reading the business","definition":"This refers to the non-physical assets of a business that contribute to its worth, such as brand reputation, customer lists, patents, and goodwill. These are often crucial for future cash flow.","url":"https://dealroom.so/glossary/intangible-value","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"contract-term","term":"Contract term","group":"People and paperwork","definition":"This specifies the duration or specific conditions that govern a legal agreement, such as a lease, supply agreement, or the purchase agreement itself.","url":"https://dealroom.so/glossary/contract-term","official_sources":[],"related":[{"slug":"legal-due-diligence","url":"https://dealroom.so/glossary/legal-due-diligence"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"covenant","url":"https://dealroom.so/glossary/covenant"}]},{"slug":"legal-dispute","term":"Legal dispute","group":"People and paperwork","definition":"This refers to any disagreement or conflict that has led to, or could lead to, legal action involving the business. It represents a potential financial liability or operational risk.","url":"https://dealroom.so/glossary/legal-dispute","official_sources":[],"related":[{"slug":"pending-lawsuit","url":"https://dealroom.so/glossary/pending-lawsuit"},{"slug":"legal-due-diligence","url":"https://dealroom.so/glossary/legal-due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"pending-lawsuit","term":"Pending lawsuit","group":"People and paperwork","definition":"A pending lawsuit means the business is currently involved in legal action, either as a plaintiff or defendant. This indicates an active legal dispute with potential financial implications.","url":"https://dealroom.so/glossary/pending-lawsuit","official_sources":[],"related":[{"slug":"legal-dispute","url":"https://dealroom.so/glossary/legal-dispute"},{"slug":"legal-due-diligence","url":"https://dealroom.so/glossary/legal-due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"legal-due-diligence","term":"Legal due diligence","group":"Doing the deal","definition":"This is the process of thoroughly reviewing all legal aspects of a business, including contracts, permits, intellectual property, and potential litigation. It aims to identify legal risks and liabilities.","url":"https://dealroom.so/glossary/legal-due-diligence","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"contract-term","url":"https://dealroom.so/glossary/contract-term"},{"slug":"pending-lawsuit","url":"https://dealroom.so/glossary/pending-lawsuit"},{"slug":"attorney-fee","url":"https://dealroom.so/glossary/attorney-fee"}]},{"slug":"insurance-coverage","term":"Insurance coverage","group":"Reading the business","definition":"This refers to the types and amounts of insurance policies a business holds, protecting it from various risks like property damage, liability claims, or business interruption.","url":"https://dealroom.so/glossary/insurance-coverage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"}]},{"slug":"debt-restructuring","term":"Debt restructuring","group":"The loan itself","definition":"This is changing the terms of an existing debt, like reducing payments or extending the loan period. Buyers care because it affects the business's cash flow and its ability to cover new loan payments.","url":"https://dealroom.so/glossary/debt-restructuring","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"global-debt-service-capacity","url":"https://dealroom.so/glossary/global-debt-service-capacity"},{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"}]},{"slug":"salary","term":"Salary","group":"Reading the business","definition":"A fixed regular payment made to employees, often monthly or bi-weekly, regardless of hours worked. Buyers care because it's a fixed operating expense that impacts the business's profitability and cash flow.","url":"https://dealroom.so/glossary/salary","official_sources":[],"related":[{"slug":"expense","url":"https://dealroom.so/glossary/expense"},{"slug":"wage","url":"https://dealroom.so/glossary/wage"},{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"owner-s-draw","url":"https://dealroom.so/glossary/owner-s-draw"}]},{"slug":"wage","term":"Wage","group":"Reading the business","definition":"Payment to employees, typically calculated hourly or by piecework, for work performed. Buyers care because wages are a variable operating expense tied to business activity, impacting profitability.","url":"https://dealroom.so/glossary/wage","official_sources":[],"related":[{"slug":"salary","url":"https://dealroom.so/glossary/salary"},{"slug":"expense","url":"https://dealroom.so/glossary/expense"},{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"cash-flow-statement","url":"https://dealroom.so/glossary/cash-flow-statement"}]},{"slug":"training-cost","term":"Training cost","group":"Reading the business","definition":"Expenses incurred to educate or develop employees' skills. Buyers care because these costs affect profitability but can also indicate investment in human capital and future growth.","url":"https://dealroom.so/glossary/training-cost","official_sources":[],"related":[{"slug":"expense","url":"https://dealroom.so/glossary/expense"},{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"}]},{"slug":"severe-delinquency","term":"Severe delinquency","group":"The loan itself","definition":"This means a borrower has failed to make loan payments for an extended period, typically 90 days or more. It's a red flag for lenders and will likely disqualify you for an SBA loan if it's on your personal credit.","url":"https://dealroom.so/glossary/severe-delinquency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"}]},{"slug":"owner-s-draw","term":"Owner's draw","group":"Reading the business","definition":"Funds taken out of a business by its owner, often from a sole proprietorship or partnership, not typically reported as a salary. Buyers care because this represents discretionary owner compensation that can be adjusted to improve cash flow.","url":"https://dealroom.so/glossary/owner-s-draw","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"salary","url":"https://dealroom.so/glossary/salary"}]},{"slug":"project-feasibility","term":"Project feasibility","group":"Reading the business","definition":"The assessment of whether a proposed business acquisition is practical and likely to succeed financially. Buyers care because it determines if the deal makes sense and if the business can support the new debt.","url":"https://dealroom.so/glossary/project-feasibility","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"global-debt-service-capacity","term":"Global debt service capacity","group":"Reading the business","definition":"A lender's evaluation of the combined ability of the business and all guarantors to repay all their debts, including the new SBA loan. Buyers care because it determines if the deal is viable from a lending perspective.","url":"https://dealroom.so/glossary/global-debt-service-capacity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"cash-flow-statement","term":"Cash flow statement","group":"Reading the business","definition":"A financial report showing how much cash a business generates and uses over a period, broken down by operating, investing, and financing activities. Buyers care because it shows the true liquidity of the business, beyond just profit.","url":"https://dealroom.so/glossary/cash-flow-statement","official_sources":[],"related":[{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"year-to-date-interim-financial-statement","term":"Year-to-date interim financial statement","group":"Reading the business","definition":"Financial reports covering a period from the beginning of the fiscal year up to a recent date, usually monthly or quarterly. Buyers care because it provides current performance data, essential for assessing recent trends and valuation.","url":"https://dealroom.so/glossary/year-to-date-interim-financial-statement","official_sources":[],"related":[{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"fiscal-year","url":"https://dealroom.so/glossary/fiscal-year"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"expense","term":"Expense","group":"Reading the business","definition":"The costs incurred in running a business to generate revenue, such as rent, utilities, and salaries. Buyers care because expenses directly reduce profit and impact the business's overall financial health.","url":"https://dealroom.so/glossary/expense","official_sources":[],"related":[{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"salary","url":"https://dealroom.so/glossary/salary"},{"slug":"wage","url":"https://dealroom.so/glossary/wage"}]},{"slug":"financial-reporting-requirement","term":"Financial reporting requirement","group":"People and paperwork","definition":"Obligations for a business to submit regular financial statements to its lender or other parties. Buyers care because these are ongoing compliance duties that must be met post-acquisition to stay in good standing with your SBA lender.","url":"https://dealroom.so/glossary/financial-reporting-requirement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"p-l","url":"https://dealroom.so/glossary/p-l"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"p-l","term":"P&L","aka":"Profit and Loss Statement","group":"Reading the business","definition":"A financial statement summarizing a business's revenues, costs, and expenses over a period, showing its net profit or loss. Buyers care because it's the primary document to assess a business's historical profitability.","url":"https://dealroom.so/glossary/p-l","official_sources":[],"related":[{"slug":"cash-flow-statement","url":"https://dealroom.so/glossary/cash-flow-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"expense","url":"https://dealroom.so/glossary/expense"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"collateral-assignment-agreement","term":"Collateral assignment agreement","group":"People and paperwork","definition":"A legal document that transfers ownership of a specific asset to a lender as collateral for a loan, without changing physical possession. Buyers care because it secures the loan, limiting your financial flexibility with that asset.","url":"https://dealroom.so/glossary/collateral-assignment-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"life-insurance-assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"haircut","term":"Haircut","group":"The loan itself","definition":"When a lender values collateral at less than its face value or market price. This protects the lender against potential losses if they have to seize and sell the asset.","url":"https://dealroom.so/glossary/haircut","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"pro-rata-share-of-recovery","term":"Pro-rata share of recovery","group":"The loan itself","definition":"If an SBA loan defaults and collateral is liquidated, the SBA and the lender split the recovery proceeds based on their pro-rata share, usually reflecting the SBA's guaranty percentage. This ensures both parties recover losses proportionally.","url":"https://dealroom.so/glossary/pro-rata-share-of-recovery","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"passive-real-estate","term":"Passive real estate","group":"Your money in the deal","definition":"Real estate held primarily for investment purposes rather than for active business operations. The SBA generally prohibits funding businesses that are primarily passive.","url":"https://dealroom.so/glossary/passive-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"use-of-funds","term":"Use of funds","group":"The loan itself","definition":"This details exactly how the SBA loan proceeds will be spent, covering everything from the purchase price to working capital and fees. The SBA has strict rules on what funds can be used for.","url":"https://dealroom.so/glossary/use-of-funds","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"commercial-vehicle","term":"Commercial vehicle","group":"Reading the business","definition":"A vehicle used primarily for business operations, such as delivery vans or service trucks. These are often assets of the business that will be transferred in the sale.","url":"https://dealroom.so/glossary/commercial-vehicle","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"guaranteed-loan-program","term":"Guaranteed loan program","group":"The loan itself","definition":"A program where the SBA guarantees a portion of a loan made by a commercial lender, reducing the lender's risk. This encourages banks to lend to small businesses they might otherwise deem too risky.","url":"https://dealroom.so/glossary/guaranteed-loan-program","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"}]},{"slug":"intermediary","term":"Intermediary","group":"People and paperwork","definition":"A professional who facilitates a business sale, such as a business broker or M&A advisor. They connect buyers and sellers and help navigate the transaction.","url":"https://dealroom.so/glossary/intermediary","official_sources":[],"related":[{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"},{"slug":"ma-advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"sales-agreement","url":"https://dealroom.so/glossary/sales-agreement"}]},{"slug":"retirement-fund","term":"Retirement fund","group":"Your money in the deal","definition":"A financial account specifically for retirement savings, such as a 401(k) or IRA. These funds can sometimes be used for an equity injection into a business acquisition.","url":"https://dealroom.so/glossary/retirement-fund","official_sources":[],"related":[{"slug":"rollover-as-business-start-up","url":"https://dealroom.so/glossary/rollover-as-business-start-up"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"rollover-as-business-start-up","term":"Rollover as Business Start-Up","aka":"ROBS","group":"Your money in the deal","definition":"A financing strategy allowing you to use your retirement funds, such as a 401(k) or IRA, as an equity injection for a business acquisition without incurring taxes or penalties. It involves setting up a new C corporation and a qualified retirement plan.","url":"https://dealroom.so/glossary/rollover-as-business-start-up","official_sources":[],"related":[{"slug":"retirement-fund","url":"https://dealroom.so/glossary/retirement-fund"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"credit-standard","term":"Credit standard","group":"The loan itself","definition":"The criteria a lender uses to evaluate a borrower's creditworthiness, including FICO scores, repayment history, and existing debt. Meeting these standards is crucial for loan approval.","url":"https://dealroom.so/glossary/credit-standard","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"fixed-margin","term":"Fixed margin","group":"The loan itself","definition":"In a variable interest rate loan, this is the constant percentage added to a fluctuating base rate (like WSJ Prime or SOFR) to determine your total interest rate. The margin itself does not change.","url":"https://dealroom.so/glossary/fixed-margin","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"sales-agreement","term":"Sales agreement","group":"People and paperwork","definition":"A legally binding contract detailing the terms and conditions of a business sale, including the purchase price, assets being transferred, and closing date. This document is central to the transaction.","url":"https://dealroom.so/glossary/sales-agreement","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"assignment-of-lease","term":"Assignment of lease","group":"People and paperwork","definition":"The transfer of a tenant's rights and obligations under an existing lease to a new tenant, typically the buyer of the business. The landlord's consent is usually required.","url":"https://dealroom.so/glossary/assignment-of-lease","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"}]},{"slug":"senior-lien","term":"Senior lien","group":"The loan itself","definition":"A claim on an asset that takes priority over all other claims in case of default or liquidation. The holder of a senior lien gets paid first from the sale of the collateral.","url":"https://dealroom.so/glossary/senior-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"financial-forecast","term":"Financial Forecast","group":"Reading the business","definition":"A projection of a business's future financial performance, including revenue, expenses, and profit. Buyers use this to understand potential growth and assess the viability of their investment.","url":"https://dealroom.so/glossary/financial-forecast","official_sources":[],"related":[{"slug":"cash-flow-statements","url":"https://dealroom.so/glossary/cash-flow-statements"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"industry-benchmarks","url":"https://dealroom.so/glossary/industry-benchmarks"}]},{"slug":"franchise-acquisition","term":"Franchise Acquisition","group":"Doing the deal","definition":"Buying an existing franchised business, meaning you'll operate under the franchisor's established brand, system, and rules. This can offer a proven model but comes with specific obligations.","url":"https://dealroom.so/glossary/franchise-acquisition","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"}]},{"slug":"future-liability","term":"Future Liability","group":"Reading the business","definition":"Obligations a business may incur in the future, such as potential lawsuits, warranty claims, or environmental cleanup costs. These are crucial to identify during due diligence as they can impact your post-acquisition cash flow.","url":"https://dealroom.so/glossary/future-liability","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"buy-sell-agreement","url":"https://dealroom.so/glossary/buy-sell-agreement"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"}]},{"slug":"repayment-default","term":"Repayment Default","group":"The loan itself","definition":"Failing to make scheduled loan payments as agreed in the loan documents. This triggers serious consequences, including potential acceleration of the loan and actions against your collateral and personal guarantee.","url":"https://dealroom.so/glossary/repayment-default","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"non-profit-business","term":"Non-Profit Business","group":"Reading the business","definition":"An organization structured to use its profits for its mission rather than distributing them to owners. Most non-profits are ineligible for standard SBA 7(a) loans, limiting acquisition financing options.","url":"https://dealroom.so/glossary/non-profit-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"veteran-owned-cooperative","url":"https://dealroom.so/glossary/veteran-owned-cooperative"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"property-insurance","term":"Property Insurance","group":"Reading the business","definition":"Coverage that protects the business's physical assets, such as buildings, equipment, and inventory, from damage or loss. Lenders require this to safeguard their collateral.","url":"https://dealroom.so/glossary/property-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"}]},{"slug":"general-liability-insurance","term":"General Liability Insurance","group":"Reading the business","definition":"Coverage protecting a business from claims of bodily injury, property damage, and personal injury caused by its operations, products, or services. It's a fundamental protection for any business owner.","url":"https://dealroom.so/glossary/general-liability-insurance","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"proof-of-clear-title","term":"Proof of Clear Title","group":"People and paperwork","definition":"Documentation demonstrating that the seller legally owns assets free and clear of any undisclosed liens or encumbrances. This is critical for ensuring you receive what you're paying for.","url":"https://dealroom.so/glossary/proof-of-clear-title","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"}]},{"slug":"prepaid-expense","term":"Prepaid Expense","group":"Reading the business","definition":"Payments made by the business for goods or services it will receive in the future, like insurance premiums or rent paid in advance. These are assets on the balance sheet.","url":"https://dealroom.so/glossary/prepaid-expense","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"buy-sell-agreement","term":"Buy-Sell Agreement","group":"People and paperwork","definition":"The primary legal contract outlining the terms and conditions of the business acquisition, including purchase price, assets being bought, and closing contingencies. This is the cornerstone of your deal.","url":"https://dealroom.so/glossary/buy-sell-agreement","official_sources":[],"related":[{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"discounted-cash-flow","term":"Discounted Cash Flow","group":"Reading the business","definition":"A valuation method that estimates the value of an investment based on its projected future cash flows, discounted back to their present value. It helps you understand what future earnings are worth today.","url":"https://dealroom.so/glossary/discounted-cash-flow","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"financial-forecast","url":"https://dealroom.so/glossary/financial-forecast"}]},{"slug":"market-multiples","term":"Market Multiples","group":"Reading the business","definition":"A valuation method that uses ratios derived from recent sales of comparable businesses to estimate a target business's value. Common multiples include multiples of EBITDA or SDE.","url":"https://dealroom.so/glossary/market-multiples","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"industry-benchmarks","term":"Industry Benchmarks","group":"Reading the business","definition":"Performance metrics, ratios, or standards common to a specific industry, used to compare a business's operational and financial health against its peers. They highlight areas of strength or weakness.","url":"https://dealroom.so/glossary/industry-benchmarks","official_sources":[],"related":[{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow-statements","url":"https://dealroom.so/glossary/cash-flow-statements"}]},{"slug":"cash-flow-statements","term":"Cash Flow Statements","group":"Reading the business","definition":"A financial report showing how much cash a business generates and uses over a period, categorized into operating, investing, and financing activities. It's crucial for understanding true liquidity.","url":"https://dealroom.so/glossary/cash-flow-statements","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"whole-life-policy","term":"Whole Life Policy","group":"People and paperwork","definition":"A type of life insurance that provides coverage for your entire life and includes a cash value component that grows over time. The SBA often requires a policy on key principals to protect the loan.","url":"https://dealroom.so/glossary/whole-life-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"universal-life-policy","term":"Universal Life Policy","group":"People and paperwork","definition":"A flexible type of permanent life insurance with a cash value component and adjustable premiums and death benefits. It's often required by the SBA to secure a loan on key principals.","url":"https://dealroom.so/glossary/universal-life-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"whole-life-policy","url":"https://dealroom.so/glossary/whole-life-policy"}]},{"slug":"pre-approval","term":"Pre-approval","group":"Doing the deal","definition":"A preliminary assessment by a lender indicating how much you might be able to borrow for a business acquisition, based on your financial profile. It confirms your eligibility and capacity before you make an offer.","url":"https://dealroom.so/glossary/pre-approval","official_sources":[],"related":[{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"historical-cash-flow","term":"Historical Cash Flow","group":"Reading the business","definition":"The actual cash generated by a business over past periods, typically seen in tax returns and financial statements. This is a key indicator of a business's ability to cover its debt service.","url":"https://dealroom.so/glossary/historical-cash-flow","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"cost-or-market-value","term":"Cost or Market Value","group":"Reading the business","definition":"An accounting principle requiring inventory to be valued at the lower of its original cost or its current market value. This prevents overstating asset values if market prices drop.","url":"https://dealroom.so/glossary/cost-or-market-value","official_sources":[],"related":[{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"seller-note-subordination-agreement","term":"Seller Note Subordination Agreement","aka":"Standby Agreement","group":"Doing the deal","definition":"A legally binding document where the seller agrees that their financing (seller note) will be paid back only after the SBA 7(a) loan is fully satisfied. This is a standard SBA requirement for seller financing.","url":"https://dealroom.so/glossary/seller-note-subordination-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"arm-s-length-employment","term":"Arm's-length Employment","aka":"Arm's length","group":"People and paperwork","definition":"Employment where the terms and conditions are fair and independent, as if the parties were unrelated, preventing conflicts of interest. The SBA requires this for certain relationships within a business.","url":"https://dealroom.so/glossary/arm-s-length-employment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"conflict-of-interest","url":"https://dealroom.so/glossary/conflict-of-interest"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"}]},{"slug":"easement","term":"Easement","group":"People and paperwork","definition":"A legal right allowing someone to use another person's land for a specific purpose, such as a utility company running lines. If you're buying real estate with the business, you need to know about any easements.","url":"https://dealroom.so/glossary/easement","official_sources":[],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"ease-of-perfection","term":"Ease of Perfection","group":"Doing the deal","definition":"How straightforward it is for a lender to legally establish their security interest (lien) in collateral, making it enforceable against other creditors. This impacts the lender's risk assessment.","url":"https://dealroom.so/glossary/ease-of-perfection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"}]},{"slug":"unencumbered-status","term":"Unencumbered Status","aka":"Unencumbered","group":"Doing the deal","definition":"Refers to an asset that is free and clear of any liens, mortgages, or other legal claims by creditors. Lenders prefer unencumbered collateral for their security.","url":"https://dealroom.so/glossary/unencumbered-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"replacement-value","term":"Replacement Value","group":"Reading the business","definition":"The cost to replace an asset with a new one of similar type and quality at current market prices. This is important for insurance purposes and valuing certain assets.","url":"https://dealroom.so/glossary/replacement-value","official_sources":[],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"useful-life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"joint-and-several-liability","term":"Joint and Several Liability","group":"People and paperwork","definition":"A legal term meaning each party to an agreement is individually responsible for the entire obligation, and collectively responsible for the entire obligation. All guarantors on an SBA loan have this.","url":"https://dealroom.so/glossary/joint-and-several-liability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"pro-rata-share","term":"Pro-Rata Share","group":"Doing the deal","definition":"A proportional distribution, meaning each party receives an amount based on their share of the whole. This concept often applies to distributions or payments among multiple stakeholders.","url":"https://dealroom.so/glossary/pro-rata-share","official_sources":[],"related":[{"slug":"asset-recovery","url":"https://dealroom.so/glossary/asset-recovery"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"asset-recovery","term":"Asset Recovery","group":"Doing the deal","definition":"The process by which a lender reclaims and sells collateral to recoup losses when a loan defaults. As a buyer, understanding this process highlights the lender's security.","url":"https://dealroom.so/glossary/asset-recovery","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"p-l-management","term":"P&L Management","aka":"Profit and Loss Management","group":"Reading the business","definition":"This is how a business manages its income and expenses to control profitability. Good P&L management means a healthier business you're buying.","url":"https://dealroom.so/glossary/p-l-management","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"breach-of-contract","term":"Breach of Contract","group":"People and paperwork","definition":"This happens when one party fails to fulfill their obligations under a legally binding agreement. It can lead to disputes, lawsuits, or financial penalties, impacting the business you're buying.","url":"https://dealroom.so/glossary/breach-of-contract","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"non-recurring-revenue","term":"Non-Recurring Revenue","group":"Reading the business","definition":"This is income a business earns from one-off events or sales not expected to repeat regularly. It's important to identify this so you don't overvalue the business based on unsustainable income.","url":"https://dealroom.so/glossary/non-recurring-revenue","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"local-zoning-regulation","term":"Local Zoning Regulation","group":"People and paperwork","definition":"These are local laws dictating how land and property can be used in specific areas. They can affect your ability to operate, expand, or even continue the existing business in its current location.","url":"https://dealroom.so/glossary/local-zoning-regulation","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"sba-upfront-guaranty-fee","term":"SBA Upfront Guaranty Fee","aka":"Upfront guaranty fee","group":"The loan itself","definition":"This is a one-time fee charged by the SBA to guarantee a portion of your 7(a) loan, reducing risk for the lender. It's a key part of your total project costs, usually financed into the loan.","url":"https://dealroom.so/glossary/sba-upfront-guaranty-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"tangible-equity-injection","term":"Tangible Equity Injection","group":"Your money in the deal","definition":"This is the portion of your down payment that comes from verifiable cash or unencumbered assets, proving your commitment to the deal. The SBA requires a minimum tangible injection for most loans.","url":"https://dealroom.so/glossary/tangible-equity-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"seller-financing-on-full-standby","term":"Seller Financing on Full Standby","group":"Your money in the deal","definition":"This is when the seller provides a loan for part of the purchase price, but you don't make any payments on it until the SBA loan is fully repaid. It counts towards your equity injection.","url":"https://dealroom.so/glossary/seller-financing-on-full-standby","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"anti-money-laundering-regulation","term":"Anti-Money Laundering Regulation","aka":"AML Regulation","group":"People and paperwork","definition":"These are laws designed to prevent financial transactions that hide illegally obtained money. Your lender must comply with these, which means they'll scrutinize your funding sources and identity.","url":"https://dealroom.so/glossary/anti-money-laundering-regulation","official_sources":[],"related":[{"slug":"bsa-aml-requirement","url":"https://dealroom.so/glossary/bsa-aml-requirement"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"bsa-aml-requirement","term":"BSA/AML Requirement","aka":"Bank Secrecy Act / Anti-Money Laundering Requirement","group":"People and paperwork","definition":"These are federal regulations requiring financial institutions to report suspicious transactions and verify customer identities to combat money laundering and terrorism financing. Your lender must follow these rules.","url":"https://dealroom.so/glossary/bsa-aml-requirement","official_sources":[],"related":[{"slug":"anti-money-laundering-regulation","url":"https://dealroom.so/glossary/anti-money-laundering-regulation"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"breach-of-the-loan-agreement","term":"Breach of the Loan Agreement","group":"People and paperwork","definition":"This occurs when you, as the borrower, fail to meet a condition or obligation outlined in your SBA loan agreement. It can lead to penalties, acceleration of the loan, or even default.","url":"https://dealroom.so/glossary/breach-of-the-loan-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"impermissible-distribution","term":"Impermissible Distribution","group":"The loan itself","definition":"This refers to taking money out of the business, such as owner's draws or dividends, that violates the terms of your SBA loan agreement. It's a serious breach that can jeopardize your loan.","url":"https://dealroom.so/glossary/impermissible-distribution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"senior-sba-debt","term":"Senior SBA Debt","group":"The loan itself","definition":"This means your SBA 7(a) loan has the highest claim on the business's assets and cash flow compared to other debts. It gets paid first in case of liquidation.","url":"https://dealroom.so/glossary/senior-sba-debt","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"}]},{"slug":"total-enterprise-value","term":"Total Enterprise Value","group":"Reading the business","definition":"This is the total value of a company, including its market capitalization, debt, and cash. It gives you a more comprehensive picture of the business's worth than just its equity.","url":"https://dealroom.so/glossary/total-enterprise-value","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"purchase-price","url":"https://dealroom.so/glossary/purchase-price"}]},{"slug":"buyout-of-a-partner","term":"Buyout of a Partner","group":"Doing the deal","definition":"This is when one or more partners purchase the ownership interest of another partner in an existing business. The SBA 7(a) loan can be used to finance this type of transaction.","url":"https://dealroom.so/glossary/buyout-of-a-partner","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"global-cash-flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"tangible-collateral","term":"Tangible Collateral","group":"The loan itself","definition":"Assets with physical form that can be pledged to secure a loan. For an SBA loan, if the business assets aren't enough, the SBA requires personal assets as collateral.","url":"https://dealroom.so/glossary/tangible-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"forced-liquidation-value","term":"Forced Liquidation Value","group":"Reading the business","definition":"The estimated price an asset would fetch if sold quickly under duress. This is often far less than fair market value and what a bank uses for collateral valuation.","url":"https://dealroom.so/glossary/forced-liquidation-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"going-concern-value","url":"https://dealroom.so/glossary/going-concern-value"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"write-offs","term":"Write-offs","group":"Reading the business","definition":"Expenses a business deducts for tax purposes that don't always reflect true operating costs. You'll \"add back\" these non-recurring or discretionary items to get a clearer picture of profitability.","url":"https://dealroom.so/glossary/write-offs","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"}]},{"slug":"character-assessment","term":"Character Assessment","group":"People and paperwork","definition":"The SBA and lenders evaluate your honesty and integrity. They look at your credit history, criminal record, and general reputation to determine if you're a trustworthy borrower.","url":"https://dealroom.so/glossary/character-assessment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"negative-cash-flow","term":"Negative Cash Flow","group":"Reading the business","definition":"When a business spends more cash than it brings in over a period. This is a critical red flag, indicating the business cannot cover its expenses, including debt service.","url":"https://dealroom.so/glossary/negative-cash-flow","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"indemnification-from-the-seller","term":"Indemnification from the Seller","group":"Doing the deal","definition":"A contractual clause where the seller promises to compensate you for specific losses or damages arising after the sale, typically for issues that occurred under their ownership.","url":"https://dealroom.so/glossary/indemnification-from-the-seller","official_sources":[],"related":[{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"attorney-fees","url":"https://dealroom.so/glossary/attorney-fees"}]},{"slug":"existing-mortgage","term":"Existing Mortgage","group":"The loan itself","definition":"A mortgage already on any real estate owned by the business or pledged by you personally. This must be considered when determining collateral availability for a new SBA loan.","url":"https://dealroom.so/glossary/existing-mortgage","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"second-mortgage","url":"https://dealroom.so/glossary/second-mortgage"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"current-appraisal","term":"Current Appraisal","group":"Reading the business","definition":"A recent professional valuation of real estate or equipment to determine its fair market value. Lenders require this to assess collateral for an SBA loan.","url":"https://dealroom.so/glossary/current-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"appraiser","url":"https://dealroom.so/glossary/appraiser"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"lender-packaging-fees","term":"Lender Packaging Fees","group":"The loan itself","definition":"Fees charged by some lenders for preparing and submitting your SBA loan application. These are regulated by the SBA and can add to your total project costs.","url":"https://dealroom.so/glossary/lender-packaging-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"attorney-fees","url":"https://dealroom.so/glossary/attorney-fees"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"attorney-fees","term":"Attorney Fees","group":"Doing the deal","definition":"Costs for legal services related to drafting and reviewing purchase agreements, loan documents, and other deal-related contracts. These are a necessary expense for protecting your interests.","url":"https://dealroom.so/glossary/attorney-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"indemnification-from-the-seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"slug":"business-valuation-fees","url":"https://dealroom.so/glossary/business-valuation-fees"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"business-valuation-fees","term":"Business Valuation Fees","group":"Doing the deal","definition":"Costs for a professional to determine the fair market value of the business. Lenders often require this to justify the loan amount and ensure the purchase price is reasonable.","url":"https://dealroom.so/glossary/business-valuation-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraiser","url":"https://dealroom.so/glossary/appraiser"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"associate-relationship","term":"Associate Relationship","group":"People and paperwork","definition":"Any close connection between parties involved in the loan, like family members, business partners, or affiliates. 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It matters because it can kill your loan application before it even starts.","url":"https://dealroom.so/glossary/impermissible-affiliation","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"delegated-lender","url":"https://dealroom.so/glossary/delegated-lender"}]},{"slug":"private-equity-firm","term":"Private Equity Firm","group":"People and paperwork","definition":"A Private Equity (PE) firm invests in companies, often with the goal of improving and reselling them. 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It's a quick way to gauge feasibility before investing significant time and money.","url":"https://dealroom.so/glossary/lender-pre-qualification","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"sba-credit-approval","url":"https://dealroom.so/glossary/sba-credit-approval"}]},{"slug":"sba-credit-approval","term":"SBA Credit Approval","group":"The loan itself","definition":"This is the official approval from the SBA for your 7(a) loan application, either directly or through a Delegated Lender. It means your deal has met all SBA eligibility and credit standards.","url":"https://dealroom.so/glossary/sba-credit-approval","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"delegated-lender","url":"https://dealroom.so/glossary/delegated-lender"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"delegated-lender","term":"Delegated Lender","group":"People and paperwork","definition":"A Delegated Lender is authorized by the SBA to make loan decisions without direct SBA review, streamlining the approval process. This often means a faster path to closing for your 7(a) loan.","url":"https://dealroom.so/glossary/delegated-lender","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"sba-credit-approval","url":"https://dealroom.so/glossary/sba-credit-approval"},{"slug":"non-delegated-lender","url":"https://dealroom.so/glossary/non-delegated-lender"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"royalty","term":"Royalty","group":"Reading the business","definition":"A royalty is a payment made for the ongoing use of an asset, like intellectual property or a brand name, often a percentage of revenue. In an acquisition, it's an ongoing expense that reduces the business's cash flow.","url":"https://dealroom.so/glossary/royalty","official_sources":[],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"}]},{"slug":"unlimited-personal-guaranty","term":"Unlimited Personal Guaranty","group":"People and paperwork","definition":"This is your personal promise to repay the entire SBA loan if the business defaults. It means your personal assets are on the line, not just your equity injection.","url":"https://dealroom.so/glossary/unlimited-personal-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"fully-subordinated-debt","term":"Fully Subordinated Debt","group":"Your money in the deal","definition":"This is a loan or debt that explicitly ranks below all other debt, especially the SBA loan, in terms of repayment priority. It's often used for seller notes to meet SBA equity injection requirements.","url":"https://dealroom.so/glossary/fully-subordinated-debt","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"intellectual-property-asset","term":"Intellectual Property Asset","group":"Reading the business","definition":"These are intangible assets like patents, trademarks, copyrights, and trade secrets that give a business exclusive rights or competitive advantages. 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It's part of a company's inventory and represents costs incurred but not yet realized as revenue.","url":"https://dealroom.so/glossary/work-in-process","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"finished-goods","url":"https://dealroom.so/glossary/finished-goods"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"current-asset","url":"https://dealroom.so/glossary/current-asset"}]},{"slug":"finished-goods","term":"Finished Goods","group":"Reading the business","definition":"These are products that have completed the manufacturing process and are ready for sale to customers. They represent a key component of inventory and directly contribute to revenue generation.","url":"https://dealroom.so/glossary/finished-goods","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"work-in-process","url":"https://dealroom.so/glossary/work-in-process"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"orderly-liquidation-value","term":"Orderly Liquidation Value","group":"Reading the business","definition":"This is the estimated price an asset would fetch if sold through an organized public sale over a reasonable marketing period. Lenders use it to assess the collateral value of a business's tangible assets.","url":"https://dealroom.so/glossary/orderly-liquidation-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"field-exam","term":"Field Exam","group":"Reading the business","definition":"A Field Exam is an on-site review of a business's accounts receivable and inventory by a third-party examiner, typically for asset-based loans. It verifies the existence and quality of these assets.","url":"https://dealroom.so/glossary/field-exam","official_sources":[],"related":[{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"}]},{"slug":"community-property-law","term":"Community Property Law","group":"People and paperwork","definition":"In community property states, assets acquired during marriage are generally considered jointly owned by both spouses. This impacts your SBA loan if you're married and live in one of these states.","url":"https://dealroom.so/glossary/community-property-law","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"three-c-s-of-credit","term":"Three C's of Credit","group":"Reading the business","definition":"These are Character, Capacity, and Collateral—the core factors lenders assess when evaluating a loan application. Understanding them helps you see the deal from the lender's perspective.","url":"https://dealroom.so/glossary/three-c-s-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"borrower-risk","url":"https://dealroom.so/glossary/borrower-risk"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"business-projection","term":"Business Projection","group":"Reading the business","definition":"This is a forecast of a business's future financial performance, including revenue, expenses, and profit. It's crucial for you and the lender to assess the business's future viability.","url":"https://dealroom.so/glossary/business-projection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"uniform-commercial-code-filing","term":"Uniform Commercial Code Filing","aka":"UCC filing","group":"People and paperwork","definition":"A UCC filing is a public notice of a lender's security interest in a borrower's personal property used as collateral. It establishes the lender's priority claim on those assets.","url":"https://dealroom.so/glossary/uniform-commercial-code-filing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"}]},{"slug":"standby-terms","term":"Standby Terms","aka":"Standby agreement","group":"Your money in the deal","definition":"These are conditions under which a seller note or other debt from an owner is subordinated to the SBA loan. This means the SBA lender gets paid first.","url":"https://dealroom.so/glossary/standby-terms","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"trust-document","term":"Trust Document","group":"People and paperwork","definition":"This legal document establishes a trust, outlining its purpose, assets, and beneficiaries. 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Your actual interest rate will change over time.","url":"https://dealroom.so/glossary/variable-spread","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"variable-interest-rate","url":"https://dealroom.so/glossary/variable-interest-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"sofr","url":"https://dealroom.so/glossary/sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"debt-service-requirements","term":"Debt Service Requirements","group":"Reading the business","definition":"This refers to the total amount of principal and interest payments a business needs to make on its debts over a specific period. 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It shows how much cash the business truly produces.","url":"https://dealroom.so/glossary/operating-cash-flow","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"adjusted-net-operating-income","url":"https://dealroom.so/glossary/adjusted-net-operating-income"},{"slug":"debt-service-requirements","url":"https://dealroom.so/glossary/debt-service-requirements"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"adjusted-net-operating-income","term":"Adjusted Net Operating Income","group":"Reading the business","definition":"The earnings of a business, adjusted for non-recurring expenses, owner's salary, and other non-operational items. 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These can impact your credit score.","url":"https://dealroom.so/glossary/credit-inquiries","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-reports","url":"https://dealroom.so/glossary/credit-reports"},{"slug":"hard-inquiries","url":"https://dealroom.so/glossary/hard-inquiries"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"hard-inquiries","term":"Hard Inquiries","group":"Reading the business","definition":"A credit check performed when you apply for new credit, like a loan or credit card. These can temporarily lower your credit score.","url":"https://dealroom.so/glossary/hard-inquiries","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"credit-inquiries","url":"https://dealroom.so/glossary/credit-inquiries"},{"slug":"credit-reports","url":"https://dealroom.so/glossary/credit-reports"},{"slug":"fico-score","url":"https://dealroom.so/glossary/fico-score"},{"slug":"creditworthiness","url":"https://dealroom.so/glossary/creditworthiness"}]},{"slug":"credit-reports","term":"Credit Reports","group":"Reading the business","definition":"Detailed summaries of your credit history, including loans, credit cards, payment history, and public records. 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The SBA generally requires at least 10% of the total project cost to be your equity injection.","url":"https://dealroom.so/glossary/minimum-equity-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"}]},{"slug":"secured-personal-line-of-credit","term":"Secured Personal Line of Credit","group":"Your money in the deal","definition":"This is a loan backed by your personal assets, like a home equity line of credit. Buyers sometimes use these funds as part of their required equity injection.","url":"https://dealroom.so/glossary/secured-personal-line-of-credit","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"home-equity-line-of-credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"}]},{"slug":"business-liability","term":"Business Liability","group":"Reading the business","definition":"This refers to all the debts and obligations a business owes. Understanding these liabilities is crucial because you'll typically inherit them in an asset purchase, or entirely in a stock purchase.","url":"https://dealroom.so/glossary/business-liability","official_sources":[],"related":[{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"}]},{"slug":"interest-only-payments","term":"Interest-Only Payments","group":"The loan itself","definition":"This is a period where your loan payments cover only the interest, not the principal. It can provide a temporary cash flow boost early in your business ownership.","url":"https://dealroom.so/glossary/interest-only-payments","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"}]},{"slug":"third-party-equity-investments","term":"Third-Party Equity Investments","group":"Your money in the deal","definition":"This is cash invested in your acquisition by someone other than you or the seller, like a family member or passive investor. These funds can count towards your minimum equity injection.","url":"https://dealroom.so/glossary/third-party-equity-investments","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"business-fair-market-value","term":"Business Fair Market Value","group":"Reading the business","definition":"This is the price at which a business would change hands between a willing buyer and a willing seller, with both having reasonable knowledge of relevant facts and neither being under compulsion to buy or sell. It’s what the business is truly worth.","url":"https://dealroom.so/glossary/business-fair-market-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"enterprise-value","url":"https://dealroom.so/glossary/enterprise-value"}]},{"slug":"related-party-transactions","term":"Related-Party Transactions","group":"Reading the business","definition":"These are dealings between the business and its owner, owner's family, or other entities they control. Buyers must scrutinize these to ensure they reflect true market value and aren't inflating or deflating profits.","url":"https://dealroom.so/glossary/related-party-transactions","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"arm-s-length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"common-management","url":"https://dealroom.so/glossary/common-management"}]},{"slug":"comparable-sales","term":"Comparable Sales","group":"Reading the business","definition":"These are recent sales of similar businesses in your industry and market. They provide crucial benchmarks for valuing the target business and ensuring your offer is reasonable.","url":"https://dealroom.so/glossary/comparable-sales","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"}]},{"slug":"enterprise-value","term":"Enterprise Value","group":"Reading the business","definition":"This is the total value of a company, including both its equity and debt, minus any cash. It represents what it would cost to buy the entire business, taking on its debt but keeping its cash.","url":"https://dealroom.so/glossary/enterprise-value","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"lien-on-personal-assets","term":"Lien on Personal Assets","group":"People and paperwork","definition":"This is a legal claim placed on your personal property, such as your home or investment accounts. It serves as collateral, allowing the lender to seize those assets if you default on your business loan.","url":"https://dealroom.so/glossary/lien-on-personal-assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"first-lien-on-business-assets","term":"First Lien on Business Assets","group":"People and paperwork","definition":"This gives your lender the top priority claim on the business's assets if the loan defaults. It means they get paid before any other creditors from the sale of those assets.","url":"https://dealroom.so/glossary/first-lien-on-business-assets","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"full-release","term":"Full Release","group":"Doing the deal","definition":"A full release confirms that parties involved in a deal have no further claims against each other regarding specific obligations or liabilities. It's a critical step in finalizing the transaction.","url":"https://dealroom.so/glossary/full-release","official_sources":[],"related":[{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"civil-litigation","term":"Civil Litigation","group":"People and paperwork","definition":"This refers to lawsuits between private parties, often concerning contract disputes or personal injury. Past or ongoing civil litigation against you or the business can impact loan eligibility or reveal hidden risks.","url":"https://dealroom.so/glossary/civil-litigation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"automatic-disqualifier","url":"https://dealroom.so/glossary/automatic-disqualifier"},{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"automatic-disqualifier","term":"Automatic Disqualifier","group":"People and paperwork","definition":"An automatic disqualifier is a specific condition or event that immediately makes you or the business ineligible for an SBA loan, regardless of other positive factors.","url":"https://dealroom.so/glossary/automatic-disqualifier","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"civil-litigation","url":"https://dealroom.so/glossary/civil-litigation"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"embezzlement","url":"https://dealroom.so/glossary/embezzlement"}]},{"slug":"deferred-prosecution","term":"Deferred Prosecution","group":"People and paperwork","definition":"A deferred prosecution agreement means someone involved in the loan application admitted to a crime but avoids conviction by meeting conditions. The SBA views this seriously, potentially impacting loan eligibility if a key principal is involved.","url":"https://dealroom.so/glossary/deferred-prosecution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"crime-involving-fraud-or-dishonesty","url":"https://dealroom.so/glossary/crime-involving-fraud-or-dishonesty"},{"slug":"current-indictment","url":"https://dealroom.so/glossary/current-indictment"},{"slug":"arrest","url":"https://dealroom.so/glossary/arrest"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"crime-involving-fraud-or-dishonesty","term":"Crime Involving Fraud or Dishonesty","group":"People and paperwork","definition":"This refers to offenses like embezzlement, bribery, or fraud. If a key principal has such a crime on their record, it's a major red flag for the SBA and can prevent loan approval.","url":"https://dealroom.so/glossary/crime-involving-fraud-or-dishonesty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"deferred-prosecution","url":"https://dealroom.so/glossary/deferred-prosecution"},{"slug":"current-indictment","url":"https://dealroom.so/glossary/current-indictment"},{"slug":"arrest","url":"https://dealroom.so/glossary/arrest"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"current-indictment","term":"Current indictment","group":"People and paperwork","definition":"A current indictment means formal charges have been filed against an individual for a crime. If a key principal is currently under indictment, the SBA will not approve a loan until the charges are resolved.","url":"https://dealroom.so/glossary/current-indictment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"deferred-prosecution","url":"https://dealroom.so/glossary/deferred-prosecution"},{"slug":"crime-involving-fraud-or-dishonesty","url":"https://dealroom.so/glossary/crime-involving-fraud-or-dishonesty"},{"slug":"arrest","url":"https://dealroom.so/glossary/arrest"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"arrest","term":"Arrest","group":"People and paperwork","definition":"An arrest means someone was taken into custody for a suspected crime. While an arrest alone isn't an automatic disqualifier for an SBA loan, the SBA will require details to assess the nature and disposition of the charge.","url":"https://dealroom.so/glossary/arrest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"deferred-prosecution","url":"https://dealroom.so/glossary/deferred-prosecution"},{"slug":"crime-involving-fraud-or-dishonesty","url":"https://dealroom.so/glossary/crime-involving-fraud-or-dishonesty"},{"slug":"current-indictment","url":"https://dealroom.so/glossary/current-indictment"},{"slug":"felony","url":"https://dealroom.so/glossary/felony"}]},{"slug":"disbursement-deadline","term":"Disbursement deadline","group":"The loan itself","definition":"This is the final date by which the lender must disburse all loan funds to you. Missing this deadline means the SBA's guaranty on the loan expires, putting the lender at full risk.","url":"https://dealroom.so/glossary/disbursement-deadline","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"initial-disbursement","url":"https://dealroom.so/glossary/initial-disbursement"},{"slug":"date-of-authorization","url":"https://dealroom.so/glossary/date-of-authorization"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"}]},{"slug":"date-of-authorization","term":"Date of authorization","group":"The loan itself","definition":"This is the date the SBA officially approves and authorizes your loan. It marks the start of the clock for several important timelines, including the Disbursement deadline.","url":"https://dealroom.so/glossary/date-of-authorization","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"disbursement-deadline","url":"https://dealroom.so/glossary/disbursement-deadline"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"amended-sba-loan-authorization","url":"https://dealroom.so/glossary/amended-sba-loan-authorization"},{"slug":"initial-disbursement","url":"https://dealroom.so/glossary/initial-disbursement"}]},{"slug":"restricted-industry","term":"Restricted industry","group":"The loan itself","definition":"Certain business activities are deemed ineligible by the SBA, regardless of how profitable they are. If the business you're buying operates in a restricted industry, it cannot get an SBA loan.","url":"https://dealroom.so/glossary/restricted-industry","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"pyramid-scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"outstanding-tax-lien","term":"Outstanding tax lien","group":"People and paperwork","definition":"This is a government claim against someone's property for unpaid taxes. An outstanding tax lien by a key principal or the selling business can block an SBA loan until it's resolved or properly subordinated.","url":"https://dealroom.so/glossary/outstanding-tax-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"sale-proceeds","term":"Sale proceeds","group":"Doing the deal","definition":"These are the funds the seller receives from the sale of their business, after accounting for all deductions, fees, and payments to existing creditors.","url":"https://dealroom.so/glossary/sale-proceeds","official_sources":[],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"optional-peg-rate","term":"Optional peg rate","group":"The loan itself","definition":"This refers to the base index rate your loan's variable interest rate is tied to, which is typically the WSJ Prime Rate or Term SOFR. Your lender may offer a choice between these.","url":"https://dealroom.so/glossary/optional-peg-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"net-fair-market-value","term":"Net fair market value","group":"Reading the business","definition":"This is the appraised value of specific assets, like equipment or real estate, minus any existing liens or encumbrances against them. It's the true unencumbered value.","url":"https://dealroom.so/glossary/net-fair-market-value","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"roll-up-acquisition","term":"Roll-up acquisition","group":"Doing the deal","definition":"This is a strategy where an acquirer buys multiple smaller businesses in the same industry and consolidates them into a larger entity to gain market share and achieve economies of scale.","url":"https://dealroom.so/glossary/roll-up-acquisition","official_sources":[],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"payroll-tax","term":"Payroll tax","group":"Reading the business","definition":"These are taxes employers withhold from employee wages (like federal income tax, Social Security, Medicare) and also pay themselves (like unemployment, employer share of Social Security/Medicare).","url":"https://dealroom.so/glossary/payroll-tax","official_sources":[],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"initial-disbursement","term":"Initial disbursement","group":"The loan itself","definition":"This is the first release of funds from your SBA loan, which typically occurs at closing. It covers the purchase price, working capital, and other immediate project costs.","url":"https://dealroom.so/glossary/initial-disbursement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"disbursement-deadline","url":"https://dealroom.so/glossary/disbursement-deadline"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"guarantee-fee","term":"Guarantee Fee","group":"The loan itself","definition":"This is an upfront fee charged by the SBA to the lender, which is then passed on to you, the borrower, for the privilege of receiving an SBA loan. It helps cover the cost of the SBA's guarantee.","url":"https://dealroom.so/glossary/guarantee-fee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"sba-program-requirements","url":"https://dealroom.so/glossary/sba-program-requirements"}]},{"slug":"license","term":"License","group":"People and paperwork","definition":"A legal permission from a government authority or private entity to operate a business, practice a profession, or use intellectual property. It's crucial for legal operation and often a condition for your loan.","url":"https://dealroom.so/glossary/license","official_sources":[],"related":[{"slug":"full-application","url":"https://dealroom.so/glossary/full-application"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"sba-program-requirements","url":"https://dealroom.so/glossary/sba-program-requirements"}]},{"slug":"marketable-security","term":"Marketable Security","group":"Reading the business","definition":"These are liquid assets like stocks, bonds, or mutual funds that can be quickly converted to cash. For a business, they represent a readily available source of funds.","url":"https://dealroom.so/glossary/marketable-security","official_sources":[],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"master-franchise","term":"Master Franchise","group":"Doing the deal","definition":"A type of franchise agreement where a franchisee is granted the right to develop and sub-franchise a brand within a specific territory, acting as a mini-franchisor. This is a complex deal structure.","url":"https://dealroom.so/glossary/master-franchise","official_sources":[],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"acquisition-target","url":"https://dealroom.so/glossary/acquisition-target"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"seller-holdback","term":"Seller Holdback","group":"Doing the deal","definition":"A portion of the purchase price held in escrow for a period after closing to ensure the seller meets certain conditions, such as indemnifying the buyer against undisclosed liabilities. It protects you from post-closing surprises.","url":"https://dealroom.so/glossary/seller-holdback","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"}]},{"slug":"organizational-chart","term":"Organizational Chart","group":"Reading the business","definition":"A visual representation of a business's internal structure, showing relationships between positions and employees. It helps you understand who does what and how the company is managed.","url":"https://dealroom.so/glossary/organizational-chart","official_sources":[],"related":[{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"intellectual-capital","url":"https://dealroom.so/glossary/intellectual-capital"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"credit-elsewhere-rule","term":"Credit Elsewhere Rule","group":"The loan itself","definition":"An SBA eligibility requirement stating that a borrower must not be able to obtain a loan on reasonable terms from non-federal sources without an SBA guarantee. It ensures SBA loans help those who genuinely need them.","url":"https://dealroom.so/glossary/credit-elsewhere-rule","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-program-requirements","url":"https://dealroom.so/glossary/sba-program-requirements"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"conventional-loan","url":"https://dealroom.so/glossary/conventional-loan"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"}]},{"slug":"intellectual-capital","term":"Intellectual Capital","group":"Reading the business","definition":"The intangible assets of a business that contribute to its value, such as patents, trademarks, proprietary processes, customer lists, and employee knowledge. It's often the hidden value driver.","url":"https://dealroom.so/glossary/intellectual-capital","official_sources":[],"related":[{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"franchise-transfer-fee","term":"Franchise Transfer Fee","group":"Doing the deal","definition":"A fee charged by the franchisor when an existing franchise is sold from one franchisee to another. This is an unavoidable cost in franchise resales.","url":"https://dealroom.so/glossary/franchise-transfer-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"}]},{"slug":"loan-guarantee","term":"Loan Guarantee","group":"The loan itself","definition":"The SBA's commitment to reimburse a lender for a portion of the loan if the borrower defaults. This reduces risk for lenders, making them more willing to lend to small businesses.","url":"https://dealroom.so/glossary/loan-guarantee","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"borrowing-capacity","term":"Borrowing Capacity","group":"The loan itself","definition":"The maximum amount of money you or a business can borrow based on financial health, collateral, and ability to repay. It dictates the size of the deal you can pursue.","url":"https://dealroom.so/glossary/borrowing-capacity","official_sources":[],"related":[{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"}]},{"slug":"acquisition-target","term":"Acquisition Target","group":"Doing the deal","definition":"The specific business you are looking to buy. Identifying the right target is the first step in the acquisition process.","url":"https://dealroom.so/glossary/acquisition-target","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"business-broker","url":"https://dealroom.so/glossary/business-broker"}]},{"slug":"full-application","term":"Full Application","group":"People and paperwork","definition":"The comprehensive set of documents and forms submitted to a lender for a formal loan decision, including personal and business financial information, and a business plan.","url":"https://dealroom.so/glossary/full-application","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"sba-program-requirements","term":"SBA Program Requirements","group":"The loan itself","definition":"The rules, regulations, and guidelines set by the Small Business Administration that govern eligibility, underwriting, and servicing of SBA-backed loans. You must meet these to get an SBA loan.","url":"https://dealroom.so/glossary/sba-program-requirements","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"credit-elsewhere-rule","url":"https://dealroom.so/glossary/credit-elsewhere-rule"},{"slug":"prudent-lending-standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}]},{"slug":"legal-liability","term":"Legal liability","group":"Reading the business","definition":"What legal responsibility the business has for past or future actions. You care because these can turn into costly lawsuits or fines, impacting the business's value and your cash flow.","url":"https://dealroom.so/glossary/legal-liability","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"contract-termination","url":"https://dealroom.so/glossary/contract-termination"},{"slug":"environmental-violation","url":"https://dealroom.so/glossary/environmental-violation"},{"slug":"environmental-compliance","url":"https://dealroom.so/glossary/environmental-compliance"}]},{"slug":"supplier-concentration","term":"Supplier concentration","group":"Reading the business","definition":"When a business relies heavily on one or a few suppliers for critical goods or services. This is a risk because losing a key supplier can cripple operations and impact your ability to serve customers.","url":"https://dealroom.so/glossary/supplier-concentration","official_sources":[],"related":[{"slug":"supply-chain","url":"https://dealroom.so/glossary/supply-chain"},{"slug":"supplier-agreement","url":"https://dealroom.so/glossary/supplier-agreement"},{"slug":"procurement-process","url":"https://dealroom.so/glossary/procurement-process"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"supply-chain","term":"Supply chain","group":"Reading the business","definition":"The entire network of businesses and activities involved in getting a product or service from raw materials to the end customer. As a buyer, you need to understand its reliability and potential vulnerabilities.","url":"https://dealroom.so/glossary/supply-chain","official_sources":[],"related":[{"slug":"supplier-concentration","url":"https://dealroom.so/glossary/supplier-concentration"},{"slug":"procurement-process","url":"https://dealroom.so/glossary/procurement-process"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"supplier-agreement","term":"Supplier agreement","group":"People and paperwork","definition":"A formal contract outlining the terms and conditions between the business and its suppliers for goods or services. You need to review these to understand costs, delivery schedules, and termination clauses.","url":"https://dealroom.so/glossary/supplier-agreement","official_sources":[],"related":[{"slug":"contract-termination","url":"https://dealroom.so/glossary/contract-termination"},{"slug":"procurement-process","url":"https://dealroom.so/glossary/procurement-process"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"environmental-violation","term":"Environmental violation","group":"Reading the business","definition":"A breach of environmental laws or regulations. This is a major concern because violations can lead to hefty fines, clean-up costs, and legal liabilities for the new owner.","url":"https://dealroom.so/glossary/environmental-violation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-compliance","url":"https://dealroom.so/glossary/environmental-compliance"},{"slug":"legal-liability","url":"https://dealroom.so/glossary/legal-liability"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"environmental-compliance","term":"Environmental compliance","group":"Reading the business","definition":"Adherence to environmental laws, regulations, and standards. You need to ensure the business meets these standards to avoid fines, legal issues, and costly remediation after you buy it.","url":"https://dealroom.so/glossary/environmental-compliance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-violation","url":"https://dealroom.so/glossary/environmental-violation"},{"slug":"legal-liability","url":"https://dealroom.so/glossary/legal-liability"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"}]},{"slug":"inventory-valuation","term":"Inventory valuation","group":"Reading the business","definition":"The method used to assign a monetary value to a business's inventory. This directly impacts the balance sheet and the cost of goods sold, affecting the business's profitability and overall value.","url":"https://dealroom.so/glossary/inventory-valuation","official_sources":[],"related":[{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"procurement-process","term":"Procurement process","group":"Reading the business","definition":"The system a business uses to acquire goods and services from external suppliers. A well-managed process ensures efficient operations, cost control, and reliable supply, which directly affects your bottom line.","url":"https://dealroom.so/glossary/procurement-process","official_sources":[],"related":[{"slug":"supply-chain","url":"https://dealroom.so/glossary/supply-chain"},{"slug":"supplier-concentration","url":"https://dealroom.so/glossary/supplier-concentration"},{"slug":"supplier-agreement","url":"https://dealroom.so/glossary/supplier-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"contract-termination","term":"Contract termination","group":"People and paperwork","definition":"The ending of a contract, either by agreement, breach, or a specified clause. As a buyer, you must understand how key contracts can be terminated and if a change of ownership triggers termination.","url":"https://dealroom.so/glossary/contract-termination","official_sources":[],"related":[{"slug":"supplier-agreement","url":"https://dealroom.so/glossary/supplier-agreement"},{"slug":"legal-liability","url":"https://dealroom.so/glossary/legal-liability"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"governance-model","term":"Governance model","group":"Reading the business","definition":"The framework of rules, practices, and processes by which a business is directed and controlled. This impacts decision-making, accountability, and the overall management structure you'll inherit.","url":"https://dealroom.so/glossary/governance-model","official_sources":[],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"customer-database","term":"Customer database","group":"Reading the business","definition":"A structured collection of information about a business's customers, including contact details, purchase history, and interactions. This is a critical asset for marketing, sales, and understanding customer behavior.","url":"https://dealroom.so/glossary/customer-database","official_sources":[],"related":[{"slug":"customer-acquisition-cost","url":"https://dealroom.so/glossary/customer-acquisition-cost"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"customer-acquisition-cost","term":"Customer acquisition cost","group":"Reading the business","definition":"The total cost of sales and marketing efforts required to acquire a new customer. Understanding this metric is crucial for evaluating the efficiency of the business's growth strategies and future profitability.","url":"https://dealroom.so/glossary/customer-acquisition-cost","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"technological-infrastructure","term":"Technological infrastructure","group":"Reading the business","definition":"The combination of hardware, software, networks, and facilities that support a business's IT operations. Its reliability and modernity directly affect efficiency, security, and future scalability.","url":"https://dealroom.so/glossary/technological-infrastructure","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"}]},{"slug":"local-building-code","term":"Local building code","group":"People and paperwork","definition":"Regulations setting minimum standards for construction, alteration, and maintenance of buildings in a specific jurisdiction. You care because non-compliance can lead to fines, forced renovations, or even business closure.","url":"https://dealroom.so/glossary/local-building-code","official_sources":[],"related":[{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"legal-liability","url":"https://dealroom.so/glossary/legal-liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"proper-permitting","term":"Proper Permitting","group":"People and paperwork","definition":"Ensures the business has all necessary licenses and permits to operate legally. Without them, you risk fines or business closure.","url":"https://dealroom.so/glossary/proper-permitting","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"operational-capacity","term":"Operational Capacity","group":"Reading the business","definition":"This is the maximum output a business can achieve with its current resources. It tells you if the business can grow without major new investment.","url":"https://dealroom.so/glossary/operational-capacity","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"key-management","term":"Key Management","group":"Reading the business","definition":"These are the essential employees whose knowledge and skills are critical to the business's daily operations and success, beyond the owner.","url":"https://dealroom.so/glossary/key-management","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"shared-services","url":"https://dealroom.so/glossary/shared-services"}]},{"slug":"aggregate-sba-7-a-loan-eligibility","term":"Aggregate SBA 7(a) Loan Eligibility","group":"The loan itself","definition":"This is the total maximum amount of SBA 7(a) loan funds any one borrower or affiliated group can receive across all loans.","url":"https://dealroom.so/glossary/aggregate-sba-7-a-loan-eligibility","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}]},{"slug":"existing-debt-obligation","term":"Existing Debt Obligation","group":"Reading the business","definition":"These are any outstanding debts the business currently owes. You need to know if these will be paid off at closing or assumed by you.","url":"https://dealroom.so/glossary/existing-debt-obligation","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"buyer-equity","term":"Buyer Equity","group":"Your money in the deal","definition":"This is the cash or other assets you contribute to the deal as your required Equity injection. It's your personal stake in the business.","url":"https://dealroom.so/glossary/buyer-equity","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"gift-letter","url":"https://dealroom.so/glossary/gift-letter"}]},{"slug":"non-sba-financing","term":"Non-SBA Financing","group":"The loan itself","definition":"Any loan or capital injection used in the deal that does not come from the SBA 7(a) program. This can include Seller notes or conventional loans.","url":"https://dealroom.so/glossary/non-sba-financing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"leased-property","term":"Leased Property","group":"Reading the business","definition":"This refers to real estate or equipment the business uses but doesn't own, instead paying rent or lease payments.","url":"https://dealroom.so/glossary/leased-property","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"operating-plan","url":"https://dealroom.so/glossary/operating-plan"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"ground-disturbance","term":"Ground Disturbance","group":"Reading the business","definition":"Any activity that involves breaking or moving the soil, which can trigger environmental review, especially if hazardous materials are present.","url":"https://dealroom.so/glossary/ground-disturbance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"guaranty-pool","term":"Guaranty Pool","group":"The loan itself","definition":"This is the collective fund of SBA Guaranty portions from many 7(a) loans, which are sold on the secondary market to investors.","url":"https://dealroom.so/glossary/guaranty-pool","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"secondary-market","url":"https://dealroom.so/glossary/secondary-market"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"certificate-of-guaranty","url":"https://dealroom.so/glossary/certificate-of-guaranty"}]},{"slug":"operating-plan","term":"Operating Plan","group":"Reading the business","definition":"This is your detailed roadmap for how the business will run after you take over, covering everything from daily operations to growth strategies.","url":"https://dealroom.so/glossary/operating-plan","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"operational-capacity","url":"https://dealroom.so/glossary/operational-capacity"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"equity-distribution","term":"Equity Distribution","group":"Reading the business","definition":"This refers to how ownership shares and profits are allocated among partners or shareholders in a business.","url":"https://dealroom.so/glossary/equity-distribution","official_sources":[],"related":[{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"buyer-equity","url":"https://dealroom.so/glossary/buyer-equity"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"loan-underwriting-period","term":"Loan Underwriting Period","group":"The loan itself","definition":"This is the timeframe during which your lender reviews all your submitted documents to decide if your loan application is approved.","url":"https://dealroom.so/glossary/loan-underwriting-period","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"credit-analysis","url":"https://dealroom.so/glossary/credit-analysis"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"shared-services","term":"Shared Services","group":"Reading the business","definition":"Functions like HR, accounting, or IT that are provided by a central entity to multiple businesses, often a parent company or related entities.","url":"https://dealroom.so/glossary/shared-services","official_sources":[],"related":[{"slug":"operating-plan","url":"https://dealroom.so/glossary/operating-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"key-management","url":"https://dealroom.so/glossary/key-management"}]},{"slug":"affiliation-concern","term":"Affiliation Concern","group":"The loan itself","definition":"A situation where the SBA considers two or more businesses related, potentially impacting their size eligibility for an SBA loan. This is critical because the SBA has size limits.","url":"https://dealroom.so/glossary/affiliation-concern","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"professional-compilation","term":"Professional Compilation","group":"Reading the business","definition":"A basic financial statement service where an accountant presents financial information without offering assurance on its accuracy or completeness. 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Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"}]},{"slug":"principal-deferral","term":"Principal Deferral","group":"The loan itself","definition":"A temporary period during which a borrower only pays interest on a loan, with no payments made towards the principal balance.","url":"https://dealroom.so/glossary/principal-deferral","official_sources":[],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferment-period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"401-k-retirement-fund","term":"401(k) Retirement Fund","group":"Your money in the deal","definition":"A tax-advantaged retirement savings plan offered by employers, allowing employees to contribute a portion of their salary before taxes.","url":"https://dealroom.so/glossary/401-k-retirement-fund","official_sources":[],"related":[{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"capital-contribution","url":"https://dealroom.so/glossary/capital-contribution"}]},{"slug":"taxable-distribution","term":"Taxable Distribution","group":"Reading the business","definition":"Money or assets paid out from a business or retirement account that is subject to income tax for the recipient.","url":"https://dealroom.so/glossary/taxable-distribution","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"acquiring-entity","term":"Acquiring entity","group":"Doing the deal","definition":"This is the legal structure (LLC, Corporation) you set up to purchase and own the business. It’s critical because it dictates liability and tax treatment.","url":"https://dealroom.so/glossary/acquiring-entity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"community-property-interest","term":"Community property interest","group":"People and paperwork","definition":"In community property states, your spouse has a legal interest in assets acquired during your marriage, including your ownership stake in a business. This impacts who needs to sign loan documents.","url":"https://dealroom.so/glossary/community-property-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"distressed-business","term":"Distressed business","group":"Reading the business","definition":"A business facing significant financial or operational challenges, often with declining revenue, high debt, or poor cash flow. Buying one means higher risk but potentially a lower purchase price.","url":"https://dealroom.so/glossary/distressed-business","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"environmental-issue","term":"Environmental issue","group":"Reading the business","definition":"Potential contamination or regulatory non-compliance related to the business's property or operations. This is a liability that can be costly to remediate.","url":"https://dealroom.so/glossary/environmental-issue","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"equity-in-real-estate","term":"Equity in real estate","group":"Your money in the deal","definition":"The portion of real estate value you own outright, calculated as its market value minus any outstanding mortgages or liens. This is a common source for your equity injection.","url":"https://dealroom.so/glossary/equity-in-real-estate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"hr","term":"HR","aka":"Human Resources","group":"Reading the business","definition":"The department or function managing employee-related matters, including hiring, training, payroll, benefits, and compliance. Effective HR is crucial for a smooth transition and retaining staff.","url":"https://dealroom.so/glossary/hr","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"}]},{"slug":"lien-filing","term":"Lien filing","group":"People and paperwork","definition":"The legal process of publicly recording a lender's claim on your assets, like equipment or real estate, as security for a loan. This establishes the lender's priority if you default.","url":"https://dealroom.so/glossary/lien-filing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"loan-closing-statement","term":"Loan closing statement","group":"People and paperwork","definition":"A detailed document outlining all funds disbursed and received, fees, and charges related to your SBA 7(a) loan and the business acquisition. It ensures transparency and accuracy.","url":"https://dealroom.so/glossary/loan-closing-statement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"operations-management","term":"Operations management","group":"Reading the business","definition":"The daily activities and processes involved in running a business to produce goods or services efficiently. Understanding current operations is key to identifying areas for improvement or risk.","url":"https://dealroom.so/glossary/operations-management","official_sources":[],"related":[{"slug":"operational-due-diligence","url":"https://dealroom.so/glossary/operational-due-diligence"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"operational-due-diligence","term":"Operational due diligence","group":"Reading the business","definition":"A deep dive into the business's day-to-day processes, systems, and personnel to assess efficiency, risks, and growth opportunities. It goes beyond financial statements.","url":"https://dealroom.so/glossary/operational-due-diligence","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"operations-management","url":"https://dealroom.so/glossary/operations-management"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"}]},{"slug":"owner-benefit","term":"Owner benefit","group":"Reading the business","definition":"Non-essential expenses paid by the business that primarily benefit the owner, such as personal car leases, travel, or discretionary salaries. These are added back to show true profitability.","url":"https://dealroom.so/glossary/owner-benefit","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"pre-qualifying","term":"Pre-qualifying","group":"The loan itself","definition":"An initial assessment by a lender to determine your general eligibility for an SBA loan based on basic financial information. It's a preliminary step, not a guarantee of funding.","url":"https://dealroom.so/glossary/pre-qualifying","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"projected-expense","term":"Projected expense","group":"Reading the business","definition":"An estimate of future costs a business expects to incur, used in financial projections to forecast profitability and cash flow. Accuracy is vital for your business plan.","url":"https://dealroom.so/glossary/projected-expense","official_sources":[],"related":[{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"revolving-working-capital","term":"Revolving working capital","group":"The loan itself","definition":"A portion of your SBA loan specifically allocated to cover ongoing operational expenses like payroll and inventory during the transition or growth phase. It acts like a line of credit.","url":"https://dealroom.so/glossary/revolving-working-capital","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"line-of-credit","url":"https://dealroom.so/glossary/line-of-credit"}]},{"slug":"spousal-guaranty","term":"Spousal Guaranty","group":"People and paperwork","definition":"If your spouse owns 20% or more of the business or is a Key Principal, they must personally guarantee the SBA loan. This ensures they are equally liable for the debt, even if they aren't directly involved in daily operations.","url":"https://dealroom.so/glossary/spousal-guaranty","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"transition-period","term":"Transition Period","group":"Doing the deal","definition":"This is the timeframe after closing when the seller helps you learn the business and transfer operations. A well-defined transition ensures you smoothly take over customer relationships, vendor accounts, and critical operational knowledge.","url":"https://dealroom.so/glossary/transition-period","official_sources":[],"related":[{"slug":"non-compete","url":"https://dealroom.so/glossary/non-compete"},{"slug":"earnout","url":"https://dealroom.so/glossary/earnout"},{"slug":"management-plan","url":"https://dealroom.so/glossary/management-plan"}]},{"slug":"unencumbered-fund","term":"Unencumbered Fund","group":"Your money in the deal","definition":"This refers to cash or assets you provide for the equity injection that are free from any liens, pledges, or restrictions. The SBA requires your equity injection to be truly yours and not borrowed against other assets.","url":"https://dealroom.so/glossary/unencumbered-fund","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"standby-agreement","url":"https://dealroom.so/glossary/standby-agreement"}]},{"slug":"existing-litigation","term":"Existing Litigation","group":"Reading the business","definition":"These are active lawsuits or legal disputes involving the business you intend to buy. Unresolved litigation can pose significant financial risks and liabilities, potentially impacting the business's value and your ability to get an SBA loan.","url":"https://dealroom.so/glossary/existing-litigation","official_sources":[],"related":[{"slug":"potential-liabilities","url":"https://dealroom.so/glossary/potential-liabilities"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"}]},{"slug":"potential-liabilities","term":"Potential Liabilities","group":"Reading the business","definition":"These are possible future financial obligations or risks that the business might incur. Identifying them during due diligence helps you assess the true cost of the business and negotiate protections against future surprises.","url":"https://dealroom.so/glossary/potential-liabilities","official_sources":[],"related":[{"slug":"existing-litigation","url":"https://dealroom.so/glossary/existing-litigation"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"}]},{"slug":"existing-liens","term":"Existing Liens","group":"People and paperwork","definition":"These are legal claims on the business's assets, often from prior debts or unpaid taxes. Any existing liens must be cleared or subordinated for your SBA loan to proceed, as the SBA typically requires a first lien position.","url":"https://dealroom.so/glossary/existing-liens","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"senior-liens","url":"https://dealroom.so/glossary/senior-liens"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"}]},{"slug":"pledged-collateral","term":"Pledged Collateral","group":"The loan itself","definition":"This refers to specific assets of the business, and often your personal assets, that you formally commit as security for the SBA loan. If you default, the lender can seize and sell this collateral to recover their funds.","url":"https://dealroom.so/glossary/pledged-collateral","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"irs-installment-agreement","term":"IRS Installment Agreement","group":"People and paperwork","definition":"This is a payment plan with the IRS for past-due taxes. If the seller or buyer has one, the SBA lender will scrutinize it closely to ensure it's current and doesn't pose a risk to loan repayment capacity.","url":"https://dealroom.so/glossary/irs-installment-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"}]},{"slug":"senior-liens","term":"Senior Liens","group":"People and paperwork","definition":"These are legal claims on assets that take priority over all other claims. The SBA typically requires its loan to be in a first lien position, meaning any existing senior liens must be paid off or properly subordinated.","url":"https://dealroom.so/glossary/senior-liens","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"existing-liens","url":"https://dealroom.so/glossary/existing-liens"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"}]},{"slug":"adjustment-frequency","term":"Adjustment Frequency","group":"The loan itself","definition":"This specifies how often the interest rate on your variable rate SBA loan can change. Understanding it helps you anticipate potential fluctuations in your monthly loan payments.","url":"https://dealroom.so/glossary/adjustment-frequency","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"}]},{"slug":"backdoor-financing","term":"Backdoor Financing","group":"Doing the deal","definition":"This refers to creative ways a seller might provide funds or structure debt that effectively circumvents SBA equity injection or standby requirements. The SBA prohibits this practice to ensure buyers have genuine equity and skin in the game.","url":"https://dealroom.so/glossary/backdoor-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"disguised-debt","url":"https://dealroom.so/glossary/disguised-debt"}]},{"slug":"partial-stake","term":"Partial Stake","group":"Doing the deal","definition":"This means acquiring less than 100% ownership of a business. While possible in some M&A scenarios, SBA 7(a) loans for business acquisitions generally require a full change of ownership for eligibility.","url":"https://dealroom.so/glossary/partial-stake","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"partner-buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"management-plan","term":"Management Plan","group":"Reading the business","definition":"This is your detailed strategy for how you will operate and grow the business after the acquisition. A strong management plan demonstrates your capability to the SBA lender and is crucial for successful underwriting.","url":"https://dealroom.so/glossary/management-plan","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"amortized","term":"Amortized","group":"The loan itself","definition":"An amortized loan is one where your regular payments gradually pay down both the principal and interest over the loan term. This ensures the loan is fully paid off by the end of its maturity period.","url":"https://dealroom.so/glossary/amortized","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"balloon-payment","url":"https://dealroom.so/glossary/balloon-payment"}]},{"slug":"sba-business-development-officer","term":"SBA Business Development Officer","aka":"BDO","group":"People and paperwork","definition":"This is the lender's employee responsible for finding new loans and working with borrowers. They're your primary contact at the bank, guiding you through the SBA loan application.","url":"https://dealroom.so/glossary/sba-business-development-officer","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"preferred-lender","url":"https://dealroom.so/glossary/preferred-lender"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"}]},{"slug":"recurring-revenue-streams","term":"Recurring revenue streams","group":"Reading the business","definition":"These are predictable, ongoing revenue sources for a business, often from subscriptions, contracts, or repeat customers. They indicate stability and make a business more valuable because future income is more certain.","url":"https://dealroom.so/glossary/recurring-revenue-streams","official_sources":[],"related":[{"slug":"cash-flow-cycle","url":"https://dealroom.so/glossary/cash-flow-cycle"},{"slug":"financial-reporting","url":"https://dealroom.so/glossary/financial-reporting"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"investment-liquidation","term":"Investment liquidation","group":"Your money in the deal","definition":"This refers to selling personal investments like stocks or mutual funds to fund your equity injection. It's a common way buyers gather the necessary down payment for an SBA loan.","url":"https://dealroom.so/glossary/investment-liquidation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"out-of-pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"financial-reporting","term":"Financial reporting","group":"Reading the business","definition":"This is the process of documenting and presenting a business's financial activities and performance. It includes statements like the Profit and Loss, Balance Sheet, and Cash Flow Statement.","url":"https://dealroom.so/glossary/financial-reporting","official_sources":[],"related":[{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"audit-trail","url":"https://dealroom.so/glossary/audit-trail"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"}]},{"slug":"lower-of-cost-or-fair-market-value","term":"Lower of cost or fair market value","group":"Reading the business","definition":"This is an accounting principle for valuing inventory or assets. You record the asset at whichever amount is less: its original cost or its current market value.","url":"https://dealroom.so/glossary/lower-of-cost-or-fair-market-value","official_sources":[],"related":[{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"asset-based-approach","url":"https://dealroom.so/glossary/asset-based-approach"}]},{"slug":"co-terminus","term":"Co-terminus","group":"Doing the deal","definition":"This means two or more loans or agreements end on the same date. In SBA deals, it usually refers to aligning repayment terms.","url":"https://dealroom.so/glossary/co-terminus","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"market-multiple","term":"Market multiple","aka":"Multiple","group":"Reading the business","definition":"This is a valuation metric derived from comparing a business to similar businesses that have recently sold. It's often expressed as a multiple of EBITDA or SDE.","url":"https://dealroom.so/glossary/market-multiple","official_sources":[],"related":[{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"asset-based-approach","term":"Asset-based approach","group":"Reading the business","definition":"This is a business valuation method that determines a company's worth by summing the fair market value of its assets, minus its liabilities.","url":"https://dealroom.so/glossary/asset-based-approach","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"}]},{"slug":"cash-flow-cycle","term":"Cash flow cycle","group":"Reading the business","definition":"This describes the movement of cash into and out of a business over a period, from initial expenditures to collecting revenue from sales.","url":"https://dealroom.so/glossary/cash-flow-cycle","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"gross-rentable-area","term":"Gross rentable area","group":"Reading the business","definition":"This is the total area within a commercial property that can be leased to tenants, including common areas shared proportionally.","url":"https://dealroom.so/glossary/gross-rentable-area","official_sources":[],"related":[{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"obligor","term":"Obligor","group":"People and paperwork","definition":"This is a person or entity legally bound to fulfill an obligation, typically to repay a debt. In an SBA loan, you, the borrower, are the primary obligor.","url":"https://dealroom.so/glossary/obligor","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"account-control-agreement","term":"Account control agreement","aka":"ACA","group":"People and paperwork","definition":"This is a legal agreement between a borrower, a lender, and a bank holding a deposit account. It gives the lender control over the funds in that account under specific conditions.","url":"https://dealroom.so/glossary/account-control-agreement","official_sources":[],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"perfect-lien","url":"https://dealroom.so/glossary/perfect-lien"},{"slug":"security-interest","url":"https://dealroom.so/glossary/security-interest"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"liquidation-cost","term":"Liquidation cost","group":"Reading the business","definition":"This refers to the expenses incurred when converting assets into cash, such as appraisal fees, auction costs, or legal fees during a business closure.","url":"https://dealroom.so/glossary/liquidation-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation-value","url":"https://dealroom.so/glossary/liquidation-value"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"jurisdiction","term":"Jurisdiction","group":"People and paperwork","definition":"This refers to the legal authority of a court or other body to hear and decide cases. It dictates which laws apply and where disputes can be resolved.","url":"https://dealroom.so/glossary/jurisdiction","official_sources":[],"related":[{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"uniform-commercial-code","url":"https://dealroom.so/glossary/uniform-commercial-code"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"personal-tax-lien","term":"Personal tax lien","group":"People and paperwork","definition":"A government claim against your personal assets for unpaid taxes. Lenders consider this a significant red flag, indicating unresolved financial obligations that could impact your ability to repay a loan.","url":"https://dealroom.so/glossary/personal-tax-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"taxing-authority","url":"https://dealroom.so/glossary/taxing-authority"},{"slug":"tax-penalty","url":"https://dealroom.so/glossary/tax-penalty"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"}]},{"slug":"taxing-authority","term":"Taxing authority","group":"People and paperwork","definition":"The government body (e.g., IRS, state Department of Revenue) responsible for collecting taxes. This is who you owe money to if you have a tax liability.","url":"https://dealroom.so/glossary/taxing-authority","official_sources":[],"related":[{"slug":"personal-tax-lien","url":"https://dealroom.so/glossary/personal-tax-lien"},{"slug":"tax-penalty","url":"https://dealroom.so/glossary/tax-penalty"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"}]},{"slug":"seller-standby-note","term":"Seller standby note","group":"Your money in the deal","definition":"A loan from the seller to the buyer, structured to be repaid only after the primary SBA loan. This arrangement helps bridge financing gaps and can reduce your required cash injection, making a deal more accessible.","url":"https://dealroom.so/glossary/seller-standby-note","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"full-standby-agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}]},{"slug":"tax-penalty","term":"Tax penalty","group":"Reading the business","definition":"A fine imposed by a taxing authority for non-compliance, such as late filing or underpayment of taxes. Recurring penalties can signal poor financial management or potential hidden liabilities within the business.","url":"https://dealroom.so/glossary/tax-penalty","official_sources":[],"related":[{"slug":"taxing-authority","url":"https://dealroom.so/glossary/taxing-authority"},{"slug":"personal-tax-lien","url":"https://dealroom.so/glossary/personal-tax-lien"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"business-size-standard","term":"Business size standard","group":"The loan itself","definition":"A limit set by the SBA that determines if a business qualifies as 'small,' typically based on average annual revenue or number of employees. Your target business must meet this standard to be eligible for an SBA 7(a) loan.","url":"https://dealroom.so/glossary/business-size-standard","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"small-business","url":"https://dealroom.so/glossary/small-business"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"stock-option","term":"Stock option","group":"Reading the business","definition":"The right, but not the obligation, to buy a company's stock at a predetermined price. If present in a target business, these can dilute your ownership or create future liabilities.","url":"https://dealroom.so/glossary/stock-option","official_sources":[],"related":[{"slug":"stock-purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"}]},{"slug":"voting-trust","term":"Voting trust","group":"People and paperwork","definition":"An agreement where shareholders transfer their voting rights to a trustee for a specific period. This consolidates voting power, which you need to understand if it affects control or decision-making in the target business.","url":"https://dealroom.so/glossary/voting-trust","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"partnership","url":"https://dealroom.so/glossary/partnership"},{"slug":"corporation","url":"https://dealroom.so/glossary/corporation"},{"slug":"llc","url":"https://dealroom.so/glossary/llc"}]},{"slug":"collateral-gap-analysis","term":"Collateral gap analysis","group":"Reading the business","definition":"An assessment performed by the lender to determine if the business's assets sufficiently secure the full SBA loan amount. A significant gap means additional collateral, often personal, will be required.","url":"https://dealroom.so/glossary/collateral-gap-analysis","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"collateral-analysis","url":"https://dealroom.so/glossary/collateral-analysis"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"sba-guaranty-repair","term":"SBA guaranty repair","group":"The loan itself","definition":"A reduction or denial of the SBA's guaranty to a lender because the lender failed to follow SBA rules. This primarily impacts the lender, but signals potential issues in loan administration that could indirectly affect you.","url":"https://dealroom.so/glossary/sba-guaranty-repair","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"sop-50-10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"plp-lender","url":"https://dealroom.so/glossary/plp-lender"},{"slug":"origination","url":"https://dealroom.so/glossary/origination"}]},{"slug":"workout-arrangement","term":"Workout arrangement","group":"The loan itself","definition":"A new agreement between a borrower and lender to restructure loan terms when the borrower cannot meet original payment obligations. This is a measure to avoid default and potential liquidation.","url":"https://dealroom.so/glossary/workout-arrangement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"deferred-payment","url":"https://dealroom.so/glossary/deferred-payment"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"}]},{"slug":"independent-contractor","term":"Independent contractor","group":"People and paperwork","definition":"A self-employed individual providing services to a business under contract, not as an employee. Misclassifying employees as contractors can lead to significant tax and legal penalties for the business.","url":"https://dealroom.so/glossary/independent-contractor","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"tax-penalty","url":"https://dealroom.so/glossary/tax-penalty"}]},{"slug":"operational-risk-analysis","term":"Operational risk analysis","group":"Reading the business","definition":"An assessment of potential threats to a business's daily operations, such as over-reliance on a single customer, supplier, or key employee. It identifies vulnerabilities that could impact future cash flow.","url":"https://dealroom.so/glossary/operational-risk-analysis","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"principal-repayment","term":"Principal repayment","group":"The loan itself","definition":"The portion of your loan payment that reduces the actual amount borrowed, distinct from the interest portion. This repayment gradually builds your equity in the acquired business.","url":"https://dealroom.so/glossary/principal-repayment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"principal-and-interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"}]},{"slug":"deferred-payment","term":"Deferred payment","group":"The loan itself","definition":"A scheduled loan payment that is postponed to a later date. This offers temporary financial relief but usually results in higher overall interest paid over the life of the loan.","url":"https://dealroom.so/glossary/deferred-payment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"workout-arrangement","url":"https://dealroom.so/glossary/workout-arrangement"},{"slug":"deferred-principal-payment","url":"https://dealroom.so/glossary/deferred-principal-payment"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"principal-repayment","url":"https://dealroom.so/glossary/principal-repayment"}]},{"slug":"unencumbered-tangible-asset","term":"Unencumbered tangible asset","aka":"Unencumbered asset","group":"Reading the business","definition":"An asset you own outright, with no liens or claims against it. For a buyer, these assets can serve as collateral for an SBA loan, strengthening your financing application.","url":"https://dealroom.so/glossary/unencumbered-tangible-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}]},{"slug":"third-party-loan","term":"Third-party loan","aka":"External loan","group":"The loan itself","definition":"This is debt from someone other than the buyer or seller, like a bank or equipment lender. When buying a business, you need to understand which existing third-party loans will be paid off or assumed.","url":"https://dealroom.so/glossary/third-party-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"}]},{"slug":"senior-claim","term":"Senior claim","aka":"First lien position","group":"The loan itself","definition":"A senior claim means a lender has the first right to an asset if the borrower defaults. Your SBA loan will typically aim for a senior claim on business assets to protect the lender.","url":"https://dealroom.so/glossary/senior-claim","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"first-lien","url":"https://dealroom.so/glossary/first-lien"},{"slug":"lien-priority","url":"https://dealroom.so/glossary/lien-priority"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"real-estate-entity","term":"Real estate entity","aka":"PropCo","group":"People and paperwork","definition":"This is a separate company, often owned by the seller, that holds the business's real estate. It's crucial to understand if you're buying just the business or also the property, or if you'll need a new lease.","url":"https://dealroom.so/glossary/real-estate-entity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"long-term-lease","url":"https://dealroom.so/glossary/long-term-lease"},{"slug":"landlord-subordination-agreement","url":"https://dealroom.so/glossary/landlord-subordination-agreement"},{"slug":"fair-market-rent","url":"https://dealroom.so/glossary/fair-market-rent"}]},{"slug":"long-term-lease","term":"Long-term lease","aka":"Extended lease","group":"People and paperwork","definition":"A lease agreement for an extended period, typically 10 years or more, often required for SBA loans. It provides stability for your business location and assures the lender you have a place to operate.","url":"https://dealroom.so/glossary/long-term-lease","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"early-termination-clause","url":"https://dealroom.so/glossary/early-termination-clause"},{"slug":"fair-market-rent","url":"https://dealroom.so/glossary/fair-market-rent"},{"slug":"landlord-subordination-agreement","url":"https://dealroom.so/glossary/landlord-subordination-agreement"}]},{"slug":"fair-market-rent","term":"Fair market rent","aka":"Market rent","group":"Reading the business","definition":"This is the going rate for similar commercial properties in the area. When buying a business that leases from a seller-owned entity, ensure the rent isn't artificially low or high.","url":"https://dealroom.so/glossary/fair-market-rent","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"real-estate-entity","url":"https://dealroom.so/glossary/real-estate-entity"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"early-termination-clause","term":"Early termination clause","group":"People and paperwork","definition":"A provision in a contract, like a lease, that allows either party to end the agreement before its scheduled end date under specific conditions. Understand its implications for your business.","url":"https://dealroom.so/glossary/early-termination-clause","official_sources":[],"related":[{"slug":"long-term-lease","url":"https://dealroom.so/glossary/long-term-lease"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"landlord-subordination-agreement","term":"Landlord subordination agreement","aka":"Landlord waiver","group":"People and paperwork","definition":"An agreement where the landlord agrees their claim on your business's assets located on their property is secondary to the SBA lender's claim. This is a common SBA requirement.","url":"https://dealroom.so/glossary/landlord-subordination-agreement","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"senior-claim","url":"https://dealroom.so/glossary/senior-claim"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"cleanup-liability","term":"Cleanup liability","aka":"Environmental liability","group":"Reading the business","definition":"This refers to the financial responsibility for cleaning up environmental contamination. When buying a business, you must assess if you could inherit these costly obligations.","url":"https://dealroom.so/glossary/cleanup-liability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"market-volatility","term":"Market volatility","group":"Reading the business","definition":"This describes how quickly and unpredictably market conditions or asset prices can change. High volatility can impact your business's revenue, costs, or the value of its assets.","url":"https://dealroom.so/glossary/market-volatility","official_sources":[],"related":[{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"market-analysis","url":"https://dealroom.so/glossary/market-analysis"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"joint-asset","term":"Joint asset","group":"People and paperwork","definition":"An asset owned by two or more parties, like a piece of equipment co-owned by spouses. For an SBA loan, clarity on ownership is essential for collateral.","url":"https://dealroom.so/glossary/joint-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"outstanding-personal-judgment","term":"Outstanding personal judgment","aka":"Unpaid judgment","group":"People and paperwork","definition":"A court order stating you owe money to a creditor, which you haven't yet paid. An SBA lender will flag this as a significant character concern.","url":"https://dealroom.so/glossary/outstanding-personal-judgment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-judgment","url":"https://dealroom.so/glossary/personal-judgment"},{"slug":"derogatory-mark","url":"https://dealroom.so/glossary/derogatory-mark"},{"slug":"credit-report","url":"https://dealroom.so/glossary/credit-report"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"}]},{"slug":"tax-obligation","term":"Tax obligation","group":"Reading the business","definition":"The amount of money a business or individual owes in taxes. Unpaid tax obligations can create serious liens and liabilities for a buyer.","url":"https://dealroom.so/glossary/tax-obligation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"financial-distress","term":"Financial distress","group":"Reading the business","definition":"A state where a business or individual struggles to meet financial commitments. Buying a business in distress requires extra scrutiny and a clear turnaround plan.","url":"https://dealroom.so/glossary/financial-distress","official_sources":[],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"operational-continuity","term":"Operational continuity","group":"Reading the business","definition":"This refers to a business's ability to keep running smoothly during and after a significant event, like a change of ownership. As a buyer, you need to ensure the business won't skip a beat after you take over.","url":"https://dealroom.so/glossary/operational-continuity","official_sources":[],"related":[{"slug":"client-retention","url":"https://dealroom.so/glossary/client-retention"},{"slug":"operational-disruption","url":"https://dealroom.so/glossary/operational-disruption"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"}]},{"slug":"viability","term":"Viability","group":"Reading the business","definition":"Viability means the business has a realistic chance of long-term success and can generate enough cash flow to cover its expenses and debt. Lenders need to see this to approve your loan.","url":"https://dealroom.so/glossary/viability","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"financial-projections","url":"https://dealroom.so/glossary/financial-projections"}]},{"slug":"client-retention","term":"Client retention","group":"Reading the business","definition":"This measures how many customers a business keeps over time. High client retention indicates a stable revenue stream and a strong customer base, which is crucial for your business's future cash flow.","url":"https://dealroom.so/glossary/client-retention","official_sources":[],"related":[{"slug":"operational-continuity","url":"https://dealroom.so/glossary/operational-continuity"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"operational-disruption","term":"Operational disruption","group":"Reading the business","definition":"This refers to any event or change that significantly interrupts a business's normal operations, potentially hurting revenue or increasing costs. As a buyer, you must minimize this during and after the acquisition.","url":"https://dealroom.so/glossary/operational-disruption","official_sources":[],"related":[{"slug":"operational-continuity","url":"https://dealroom.so/glossary/operational-continuity"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","url":"https://dealroom.so/glossary/change-of-ownership"},{"slug":"key-man-insurance","url":"https://dealroom.so/glossary/key-man-insurance"}]},{"slug":"passive-rental-income","term":"Passive rental income","group":"Reading the business","definition":"This is income generated from property rentals where the owner isn't actively involved in daily management. The SBA generally won't lend to businesses primarily generating this type of income.","url":"https://dealroom.so/glossary/passive-rental-income","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"active-enterprise","url":"https://dealroom.so/glossary/active-enterprise"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"}]},{"slug":"active-enterprise","term":"Active enterprise","group":"Reading the business","definition":"An active enterprise is a business engaged in ongoing commercial activity, providing goods or services. The SBA 7(a) loan program is exclusively for these types of businesses, not passive investments.","url":"https://dealroom.so/glossary/active-enterprise","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"passive-rental-income","url":"https://dealroom.so/glossary/passive-rental-income"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"managerial-discretion","term":"Managerial discretion","group":"Reading the business","definition":"This refers to the freedom a business owner or manager has to make independent decisions about how the business operates. The SBA requires this for a business to be considered an active enterprise.","url":"https://dealroom.so/glossary/managerial-discretion","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"active-enterprise","url":"https://dealroom.so/glossary/active-enterprise"},{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"negative-control","url":"https://dealroom.so/glossary/negative-control"}]},{"slug":"underwriting-fee","term":"Underwriting fee","group":"The loan itself","definition":"This is a fee charged by some lenders for processing and evaluating your loan application. It covers their internal costs for due diligence and preparing the loan for approval.","url":"https://dealroom.so/glossary/underwriting-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"commitment-letter","url":"https://dealroom.so/glossary/commitment-letter"}]},{"slug":"cap","term":"Cap","group":"The loan itself","definition":"A cap is an upper limit, often referring to the maximum interest rate that can be charged on a variable-rate loan. It protects you from excessive rate increases.","url":"https://dealroom.so/glossary/cap","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"}]},{"slug":"original-term","term":"Original term","group":"The loan itself","definition":"This is the initial period over which your loan is scheduled to be repaid. It determines the length of your payment schedule and impacts your monthly debt service.","url":"https://dealroom.so/glossary/original-term","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}]},{"slug":"aggregate-outstanding-principal-balance","term":"Aggregate outstanding principal balance","group":"The loan itself","definition":"This is the total sum of all unpaid principal amounts across all SBA loans a borrower or its affiliates currently owe. The SBA has limits on this total.","url":"https://dealroom.so/glossary/aggregate-outstanding-principal-balance","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"maximum-loan-limit","url":"https://dealroom.so/glossary/maximum-loan-limit"},{"slug":"affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"maximum-loan-limit","term":"Maximum loan limit","group":"The loan itself","definition":"This is the highest dollar amount the SBA will guarantee for a single 7(a) loan to any one borrower. For 7(a), it's currently $5 million.","url":"https://dealroom.so/glossary/maximum-loan-limit","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"aggregate-outstanding-principal-balance","url":"https://dealroom.so/glossary/aggregate-outstanding-principal-balance"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"disclosure","term":"Disclosure","group":"People and paperwork","definition":"This refers to the act of revealing all relevant and material information about a business or transaction. Full disclosure is legally required and critical for making informed decisions as a buyer.","url":"https://dealroom.so/glossary/disclosure","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"material-information","url":"https://dealroom.so/glossary/material-information"},{"slug":"intentional-misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"},{"slug":"omission-of-material-facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}]},{"slug":"business-valuation-report","term":"Business valuation report","group":"Reading the business","definition":"This is a formal document that estimates the fair market value of a business. Your 7(a) lender will require one to ensure the purchase price is justified.","url":"https://dealroom.so/glossary/business-valuation-report","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"independent-third-party-appraisal","term":"Independent third-party appraisal","group":"Reading the business","definition":"A valuation by an unbiased expert of the business or its assets. Lenders require this to ensure the purchase price is fair and the collateral value is sufficient for the loan.","url":"https://dealroom.so/glossary/independent-third-party-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"assumption-of-debt","term":"Assumption of debt","group":"Doing the deal","definition":"This is when you, the buyer, take over an existing debt obligation from the seller. It means you become responsible for paying off that specific loan or liability going forward.","url":"https://dealroom.so/glossary/assumption-of-debt","official_sources":[],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"}]},{"slug":"under-collateralized-loan","term":"Under-collateralized loan","group":"The loan itself","definition":"This is a loan where the value of the assets pledged as collateral is less than the loan amount. The SBA will still guarantee these loans if the business's cash flow is strong enough to cover debt payments.","url":"https://dealroom.so/glossary/under-collateralized-loan","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"life-insurance-cash-value","term":"Life insurance cash value","group":"Your money in the deal","definition":"This is the savings component that accumulates within certain types of life insurance policies, like whole life. It can be borrowed against or withdrawn, making it a potential source of funds for your equity injection.","url":"https://dealroom.so/glossary/life-insurance-cash-value","official_sources":[],"related":[{"slug":"whole-life-insurance-policy","url":"https://dealroom.so/glossary/whole-life-insurance-policy"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"unencumbered-liquid-asset","url":"https://dealroom.so/glossary/unencumbered-liquid-asset"}]},{"slug":"erisa","term":"ERISA","aka":"Employee Retirement Income Security Act","group":"People and paperwork","definition":"A federal law setting minimum standards for most private industry retirement and health plans to protect participants. As a buyer, you need to understand existing plans to ensure compliance and avoid inherited liabilities.","url":"https://dealroom.so/glossary/erisa","official_sources":[],"related":[{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"whole-life-insurance-policy","term":"Whole life insurance policy","group":"Your money in the deal","definition":"A type of life insurance that provides coverage for your entire life and accumulates cash value over time. This cash value can be a valuable asset for your loan application or as collateral.","url":"https://dealroom.so/glossary/whole-life-insurance-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance-cash-value","url":"https://dealroom.so/glossary/life-insurance-cash-value"},{"slug":"life-insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"assignment-of-policy-form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"deferred-prosecution-agreement","term":"Deferred prosecution agreement","group":"People and paperwork","definition":"An agreement where a prosecutor agrees to drop charges after a period if an individual or company meets certain conditions. For SBA loan applicants, this can raise character eligibility concerns.","url":"https://dealroom.so/glossary/deferred-prosecution-agreement","official_sources":[{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"felony","url":"https://dealroom.so/glossary/felony"},{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"good-character","url":"https://dealroom.so/glossary/good-character"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"}]},{"slug":"initial-franchise-fee","term":"Initial franchise fee","group":"Doing the deal","definition":"The upfront payment made to a franchisor to acquire the rights to operate a franchise business. This fee is a component of your total project costs and is an eligible use of 7(a) loan funds.","url":"https://dealroom.so/glossary/initial-franchise-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"owner-draw","term":"Owner draw","group":"Reading the business","definition":"Funds taken out of a business by its owner, typically from a sole proprietorship or partnership, for personal use. It's a key component of seller's discretionary earnings (SDE) and understanding the true owner benefit.","url":"https://dealroom.so/glossary/owner-draw","official_sources":[],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"unencumbered-liquid-asset","term":"Unencumbered liquid asset","group":"Reading the business","definition":"An asset that can be quickly converted to cash (liquid) and is not pledged as collateral for any debt (unencumbered). Lenders look for these to assess your personal financial strength and capacity for equity injection.","url":"https://dealroom.so/glossary/unencumbered-liquid-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-liquidity","url":"https://dealroom.so/glossary/personal-liquidity"},{"slug":"readily-marketable-security","url":"https://dealroom.so/glossary/readily-marketable-security"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"readily-marketable-security","term":"Readily marketable security","group":"Reading the business","definition":"An investment, like a stock or bond, that can be easily and quickly bought or sold on a public exchange for cash. The SBA considers these valuable for collateral or personal liquidity.","url":"https://dealroom.so/glossary/readily-marketable-security","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"marketable-securities","url":"https://dealroom.so/glossary/marketable-securities"},{"slug":"unencumbered-liquid-asset","url":"https://dealroom.so/glossary/unencumbered-liquid-asset"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"brokerage-statement","url":"https://dealroom.so/glossary/brokerage-statement"}]},{"slug":"trade-confirmation","term":"Trade confirmation","group":"People and paperwork","definition":"A document from a broker confirming the details of a securities transaction, such as buying or selling stocks or bonds. Lenders may request these to verify the source and seasoning of funds for your equity injection.","url":"https://dealroom.so/glossary/trade-confirmation","official_sources":[],"related":[{"slug":"brokerage-statement","url":"https://dealroom.so/glossary/brokerage-statement"},{"slug":"bank-statement","url":"https://dealroom.so/glossary/bank-statement"},{"slug":"proof-of-funds","url":"https://dealroom.so/glossary/proof-of-funds"}]},{"slug":"irrevocably-vested","term":"Irrevocably vested","group":"People and paperwork","definition":"This means a right or benefit, often related to retirement plans or stock options, cannot be taken away or forfeited. It signifies a permanent, non-revertible ownership.","url":"https://dealroom.so/glossary/irrevocably-vested","official_sources":[],"related":[{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"bsa-aml-regulations","term":"BSA/AML regulations","aka":"Bank Secrecy Act / Anti-Money Laundering regulations","group":"People and paperwork","definition":"Federal laws requiring financial institutions to report suspicious transactions to prevent money laundering and other illicit financial activities. Lenders must comply, and your character is assessed against these principles.","url":"https://dealroom.so/glossary/bsa-aml-regulations","official_sources":[],"related":[{"slug":"fraud","url":"https://dealroom.so/glossary/fraud"},{"slug":"compliance","url":"https://dealroom.so/glossary/compliance"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"pre-paid-lease","term":"Pre-paid lease","group":"People and paperwork","definition":"A lease payment made in advance for future occupancy or use of an asset. For a buyer, this means the seller has already covered some of your future occupancy costs, which is a benefit.","url":"https://dealroom.so/glossary/pre-paid-lease","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"primary-lienholder","term":"Primary lienholder","aka":"First lien","group":"People and paperwork","definition":"The party holding the first claim on an asset if a debt isn't paid, giving them priority over other creditors. As a buyer, you need to know who has first claim on the business's assets, especially if you're using an SBA loan.","url":"https://dealroom.so/glossary/primary-lienholder","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-position","url":"https://dealroom.so/glossary/lien-position"},{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}]},{"slug":"environmental-lien","term":"Environmental lien","group":"People and paperwork","definition":"A claim against property for costs related to environmental cleanup or regulatory compliance. Buyers must identify these during due diligence, as they can represent significant, unexpected liabilities tied to the property.","url":"https://dealroom.so/glossary/environmental-lien","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-remediation","url":"https://dealroom.so/glossary/environmental-remediation"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"advance-rate","term":"Advance rate","aka":"Discount","group":"The loan itself","definition":"The percentage of a collateral's value a lender is willing to finance. For a buyer, this determines how much of your loan can be secured by specific assets like accounts receivable or inventory, impacting your collateral shortfall.","url":"https://dealroom.so/glossary/advance-rate","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"}]},{"slug":"face-value","term":"Face value","group":"Reading the business","definition":"The nominal or stated value of a financial instrument, asset, or debt, without considering market fluctuations or present value. As a buyer, understand that face value doesn't always reflect true market value or your actual liability.","url":"https://dealroom.so/glossary/face-value","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"}]},{"slug":"dilution","term":"Dilution","group":"Reading the business","definition":"A reduction in the value of an asset or the ownership percentage due to the issuance of new shares or a decrease in its intrinsic worth. For a buyer, dilution can impact the effective value of your equity or certain business assets post-acquisition.","url":"https://dealroom.so/glossary/dilution","official_sources":[],"related":[{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"}]},{"slug":"marital-interest","term":"Marital interest","group":"People and paperwork","definition":"The legal rights a spouse has in a married person's property, including business assets, during a marriage or upon divorce. As a buyer, you need to ensure any spouse with a marital interest consents to the sale to prevent future claims.","url":"https://dealroom.so/glossary/marital-interest","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"community-property-rights","url":"https://dealroom.so/glossary/community-property-rights"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"community-property-rights","term":"Community property rights","group":"People and paperwork","definition":"Legal rights in certain states where spouses equally own assets acquired during marriage. Buyers must be aware of these rights to ensure all necessary spousal consents are obtained from the seller to avoid future disputes over ownership.","url":"https://dealroom.so/glossary/community-property-rights","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"marital-interest","url":"https://dealroom.so/glossary/marital-interest"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"federal-tax-liabilities","term":"Federal tax liabilities","group":"Reading the business","definition":"Amounts owed by the business or seller to the federal government for taxes like income, payroll, or excise taxes. Unpaid federal tax liabilities can become a lien on business assets or even transfer to you as a buyer.","url":"https://dealroom.so/glossary/federal-tax-liabilities","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"liability","url":"https://dealroom.so/glossary/liability"}]},{"slug":"service-fee","term":"Service fee","aka":"Ongoing servicing fee","group":"The loan itself","definition":"A recurring charge paid to a lender for managing and administering your loan. As a buyer, this is an ongoing cost that impacts your loan's effective interest rate and overall debt service.","url":"https://dealroom.so/glossary/service-fee","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ongoing-servicing-fee","url":"https://dealroom.so/glossary/ongoing-servicing-fee"},{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"debt-service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"}]},{"slug":"environmental-remediation","term":"Environmental remediation","group":"Reading the business","definition":"The process of cleaning up contaminated land, water, or air to meet environmental standards. As a buyer, you must understand any potential environmental issues and associated remediation costs before closing, as these can be substantial liabilities.","url":"https://dealroom.so/glossary/environmental-remediation","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-lien","url":"https://dealroom.so/glossary/environmental-lien"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"phase-i-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"equipment-appraiser","term":"Equipment appraiser","aka":"Appraiser","group":"People and paperwork","definition":"A professional who determines the fair market value of machinery and equipment. As a buyer, an appraiser's report helps you verify the value of assets you're purchasing and ensures adequate collateral for your SBA loan.","url":"https://dealroom.so/glossary/equipment-appraiser","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"ucc-searches","term":"UCC searches","aka":"Lien search","group":"Doing the deal","definition":"A review of public records to identify any existing Uniform Commercial Code (UCC) filings against a business's assets. As a buyer, these searches confirm the seller has clear title to the assets and identify any liens that must be satisfied at closing.","url":"https://dealroom.so/glossary/ucc-searches","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ucc-filing","url":"https://dealroom.so/glossary/ucc-filing"},{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"lien-search","url":"https://dealroom.so/glossary/lien-search"},{"slug":"primary-lienholder","url":"https://dealroom.so/glossary/primary-lienholder"}]},{"slug":"title-reviews","term":"Title reviews","group":"Doing the deal","definition":"The examination of public records to confirm ownership and identify any encumbrances on real estate or other titled assets. Buyers rely on these reviews to ensure clear and marketable title to purchased property.","url":"https://dealroom.so/glossary/title-reviews","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"mortgage","url":"https://dealroom.so/glossary/mortgage"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"look-back-periods","term":"Look-back periods","group":"Reading the business","definition":"These are the historical periods (e.g., 3 years) for which lenders examine a business's financial statements to assess performance and trends. As a buyer, you care because they show the business's track record.","url":"https://dealroom.so/glossary/look-back-periods","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"subleasing","term":"Subleasing","group":"Reading the business","definition":"Subleasing is when a tenant rents out all or part of their leased property to another party, known as a subtenant. As a buyer, you care if the business you're acquiring has a sublease arrangement, as it affects your occupancy and rental costs.","url":"https://dealroom.so/glossary/subleasing","official_sources":[],"related":[{"slug":"lease-agreement","url":"https://dealroom.so/glossary/lease-agreement"},{"slug":"leasehold-improvement","url":"https://dealroom.so/glossary/leasehold-improvement"}]},{"slug":"loan-closing-costs","term":"Loan closing costs","group":"The loan itself","definition":"These are the various fees and expenses you pay at the loan closing to finalize your SBA 7(a) loan. As a buyer, you care because these costs are part of your total project costs and affect your required equity injection.","url":"https://dealroom.so/glossary/loan-closing-costs","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"guaranty-fee","url":"https://dealroom.so/glossary/guaranty-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"legal-fee","url":"https://dealroom.so/glossary/legal-fee"}]},{"slug":"fully-subordinated-note","term":"Fully subordinated note","group":"The loan itself","definition":"This is a seller note where the seller agrees that repayment of their note is entirely secondary to the SBA 7(a) loan. As a buyer, you care because this note can count towards your minimum equity injection.","url":"https://dealroom.so/glossary/fully-subordinated-note","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"subordinated-debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"standby","url":"https://dealroom.so/glossary/standby"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"deficiency-judgment","term":"Deficiency judgment","group":"The loan itself","definition":"This is a court order requiring a borrower or guarantor to pay the remaining debt after collateral has been sold and didn't cover the full loan amount. As a buyer, you care because it highlights the personal risk associated with your SBA loan.","url":"https://dealroom.so/glossary/deficiency-judgment","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"recourse","url":"https://dealroom.so/glossary/recourse"},{"slug":"liquidation-plan","url":"https://dealroom.so/glossary/liquidation-plan"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"loan-pricing","term":"Loan pricing","group":"The loan itself","definition":"Loan pricing refers to the interest rate and fees charged on a loan, determining your cost of borrowing. As a buyer, you care because it directly impacts your monthly debt service and the overall profitability of your acquired business.","url":"https://dealroom.so/glossary/loan-pricing","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"variable-rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"wsj-prime","url":"https://dealroom.so/glossary/wsj-prime"},{"slug":"term-sofr","url":"https://dealroom.so/glossary/term-sofr"},{"slug":"spread","url":"https://dealroom.so/glossary/spread"}]},{"slug":"rollover-for-business-start-ups-plan","term":"Rollover for Business Start-ups plan","aka":"ROBS plan","group":"Your money in the deal","definition":"A ROBS plan allows you to use your existing retirement funds (like a 401k or IRA) to invest in a business without incurring early withdrawal penalties or taxes. As a buyer, you care because it provides a way to fund your equity injection using pre-tax dollars.","url":"https://dealroom.so/glossary/rollover-for-business-start-ups-plan","official_sources":[],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"robs","url":"https://dealroom.so/glossary/robs"},{"slug":"minimum-cash-injection","url":"https://dealroom.so/glossary/minimum-cash-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"}]},{"slug":"minimum-cash-injection","term":"Minimum cash injection","group":"Your money in the deal","definition":"This is the lowest amount of your own funds (or approved equity) you must contribute to the total project costs of an SBA 7(a) business acquisition. As a buyer, you care because it sets the floor for how much cash you need to bring to the table.","url":"https://dealroom.so/glossary/minimum-cash-injection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"liquid-contribution","url":"https://dealroom.so/glossary/liquid-contribution"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"liquid-contribution","term":"Liquid contribution","group":"Your money in the deal","definition":"This is the portion of your equity injection that must be in cash or easily convertible assets, readily available and unencumbered. As a buyer, you care because it's a non-negotiable part of your required down payment.","url":"https://dealroom.so/glossary/liquid-contribution","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"minimum-cash-injection","url":"https://dealroom.so/glossary/minimum-cash-injection"},{"slug":"seasoned-funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"unencumbered","url":"https://dealroom.so/glossary/unencumbered"}]},{"slug":"operating-cycle","term":"Operating cycle","group":"Reading the business","definition":"This is the time it takes for a business to purchase inventory, sell it, and collect the cash from sales. As a buyer, you care because it impacts the business's working capital needs and cash flow management.","url":"https://dealroom.so/glossary/operating-cycle","official_sources":[],"related":[{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"inventory","url":"https://dealroom.so/glossary/inventory"},{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"}]},{"slug":"cash-flow-test","term":"Cash flow test","group":"Reading the business","definition":"This is an analysis performed by lenders to determine if a business generates enough cash to cover all its operating expenses and debt payments. As a buyer, you care because it's how the lender decides if the business can afford the new SBA loan.","url":"https://dealroom.so/glossary/cash-flow-test","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"}]},{"slug":"blue-sky","term":"Blue sky","group":"Reading the business","definition":"This refers to the intangible value of a business beyond its tangible assets, often representing goodwill, brand recognition, or future earning potential. As a buyer, you care because this is what you're paying for when the purchase price exceeds asset value.","url":"https://dealroom.so/glossary/blue-sky","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"intangible-asset","url":"https://dealroom.so/glossary/intangible-asset"},{"slug":"earnings","url":"https://dealroom.so/glossary/earnings"}]},{"slug":"earnings","term":"Earnings","group":"Reading the business","definition":"Earnings represent the profit a business generates, which is fundamental to its valuation and its ability to repay debt. As a buyer, you care because this is the core metric for assessing the business's financial health and future prospects.","url":"https://dealroom.so/glossary/earnings","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"owner-earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"}]},{"slug":"narrative-appraisal","term":"Narrative appraisal","group":"Reading the business","definition":"This is a comprehensive valuation report that details the appraiser's methodology, assumptions, and conclusion of a business's fair market value. As a buyer, you care because it provides an independent assessment of what you're paying for the business.","url":"https://dealroom.so/glossary/narrative-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"}]},{"slug":"concentrated-risk","term":"Concentrated risk","group":"Reading the business","definition":"A business has concentrated risk if too much revenue comes from a few customers, suppliers, or products. This makes the business vulnerable if those relationships change.","url":"https://dealroom.so/glossary/concentrated-risk","official_sources":[],"related":[{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"}]},{"slug":"passive-ownership","term":"Passive ownership","group":"People and paperwork","definition":"This means you own part of a business but aren't actively involved in its daily operations or management. The SBA has specific rules about who can be a passive owner in a 7(a) deal.","url":"https://dealroom.so/glossary/passive-ownership","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","url":"https://dealroom.so/glossary/co-borrower"}]},{"slug":"community-property-asset","term":"Community property asset","group":"People and paperwork","definition":"In community property states, assets acquired during marriage are typically owned equally by both spouses, even if only one name is on the title. This includes business assets or personal collateral.","url":"https://dealroom.so/glossary/community-property-asset","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"personal-financial-statement","url":"https://dealroom.so/glossary/personal-financial-statement"}]},{"slug":"state-licensed-or-certified-appraiser","term":"State-licensed or certified appraiser","aka":"Appraiser","group":"People and paperwork","definition":"This is a professional qualified to perform business valuations or real estate appraisals according to state and federal standards. Lenders rely on their independent assessment of value.","url":"https://dealroom.so/glossary/state-licensed-or-certified-appraiser","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"appraisal-report","url":"https://dealroom.so/glossary/appraisal-report"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"appraisal-report","term":"Appraisal report","aka":"Appraisal","group":"Reading the business","definition":"This is a formal document from a qualified appraiser detailing the fair market value of a business, its assets, or real estate. Lenders use it to assess collateral and deal viability.","url":"https://dealroom.so/glossary/appraisal-report","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"state-licensed-or-certified-appraiser","url":"https://dealroom.so/glossary/state-licensed-or-certified-appraiser"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"collateral","url":"https://dealroom.so/glossary/collateral"}]},{"slug":"project-costs","term":"Project costs","group":"Reading the business","definition":"This refers to the total funds needed to complete your business acquisition, including the purchase price, working capital, closing costs, and any required renovations or equipment.","url":"https://dealroom.so/glossary/project-costs","official_sources":[],"related":[{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"market-comparables","term":"Market comparables","aka":"Comps","group":"Reading the business","definition":"These are recent sales data for similar businesses or properties in the same industry or geographic area. They help determine a fair market value for the business you're buying.","url":"https://dealroom.so/glossary/market-comparables","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal-report","url":"https://dealroom.so/glossary/appraisal-report"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"multiple","url":"https://dealroom.so/glossary/multiple"}]},{"slug":"bad-debt-reserves","term":"Bad debt reserves","aka":"Allowance for doubtful accounts","group":"Reading the business","definition":"This is an accounting allowance for accounts receivable that are unlikely to be collected. It reflects potential losses from customers who won't pay their bills.","url":"https://dealroom.so/glossary/bad-debt-reserves","official_sources":[],"related":[{"slug":"accounts-receivable","url":"https://dealroom.so/glossary/accounts-receivable"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}]},{"slug":"loan-to-cost-ratio","term":"Loan-to-cost ratio","aka":"LTC ratio","group":"The loan itself","definition":"This ratio compares the loan amount to the total project costs. It tells you what percentage of the deal is financed by the loan versus your equity.","url":"https://dealroom.so/glossary/loan-to-cost-ratio","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"overall-leverage","url":"https://dealroom.so/glossary/overall-leverage"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"lawful-permanent-residency","term":"Lawful permanent residency","aka":"Green card","group":"People and paperwork","definition":"This status grants non-citizens the right to live and work permanently in the U.S., commonly known as having a \"green card.\" SBA borrowers must meet specific citizenship or residency requirements.","url":"https://dealroom.so/glossary/lawful-permanent-residency","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"qualified-non-immigrant-status","url":"https://dealroom.so/glossary/qualified-non-immigrant-status"},{"slug":"form-i-551","url":"https://dealroom.so/glossary/form-i-551"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"}]},{"slug":"qualified-non-immigrant-status","term":"Qualified non-immigrant status","group":"People and paperwork","definition":"This refers to certain non-citizen visa holders who are eligible for SBA loans, such as those on E-2, H-1B, or L-1 visas. They must meet specific criteria for residency and intent.","url":"https://dealroom.so/glossary/qualified-non-immigrant-status","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lawful-permanent-residency","url":"https://dealroom.so/glossary/lawful-permanent-residency"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"uscis","url":"https://dealroom.so/glossary/uscis"}]},{"slug":"cash-out","term":"Cash-out","group":"The loan itself","definition":"In an SBA context, this typically refers to refinancing existing debt where a portion of the new loan proceeds goes directly to the borrower for personal use or working capital beyond the refinance.","url":"https://dealroom.so/glossary/cash-out","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"refinancing","url":"https://dealroom.so/glossary/refinancing"},{"slug":"business-debt-refinancing","url":"https://dealroom.so/glossary/business-debt-refinancing"}]},{"slug":"income-capitalization","term":"Income capitalization","group":"Reading the business","definition":"This is a valuation method that estimates a business's value based on its expected future income or cash flow, converting it into a present value. It's a key method for valuing profitable businesses.","url":"https://dealroom.so/glossary/income-capitalization","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal-report","url":"https://dealroom.so/glossary/appraisal-report"},{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"cost-approach","term":"Cost approach","group":"Reading the business","definition":"This valuation method estimates an asset's value by calculating the cost to replace it new, minus depreciation. It's often used for valuing tangible assets like real estate or equipment.","url":"https://dealroom.so/glossary/cost-approach","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal-report","url":"https://dealroom.so/glossary/appraisal-report"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"fair-market-value","url":"https://dealroom.so/glossary/fair-market-value"}]},{"slug":"replacement-cost-approach","term":"Replacement cost approach","group":"Reading the business","definition":"A business valuation method that estimates the cost to replace a business's assets with new ones of similar utility. It's less common for small businesses unless they're asset-heavy, as it often undervalues goodwill.","url":"https://dealroom.so/glossary/replacement-cost-approach","official_sources":[],"related":[{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"}]},{"slug":"closing-documents","term":"Closing documents","group":"Doing the deal","definition":"The complete set of legal papers you and the seller sign to finalize the purchase of the business and the SBA loan. These documents transfer ownership and obligate you to the loan terms.","url":"https://dealroom.so/glossary/closing-documents","official_sources":[],"related":[{"slug":"legal-fees","url":"https://dealroom.so/glossary/legal-fees"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"sba-loan-authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"},{"slug":"asset-purchase","url":"https://dealroom.so/glossary/asset-purchase"}]},{"slug":"escrow-agents","term":"Escrow agents","group":"People and paperwork","definition":"A neutral third party who holds funds and documents related to the transaction until all conditions of the deal are met. They ensure a fair and secure transfer for both buyer and seller.","url":"https://dealroom.so/glossary/escrow-agents","official_sources":[],"related":[{"slug":"escrow-holdback","url":"https://dealroom.so/glossary/escrow-holdback"},{"slug":"closing-documents","url":"https://dealroom.so/glossary/closing-documents"},{"slug":"legal-fees","url":"https://dealroom.so/glossary/legal-fees"},{"slug":"equity-injection","url":"https://dealroom.so/glossary/equity-injection"}]},{"slug":"legal-fees","term":"Legal fees","group":"Doing the deal","definition":"The costs for attorneys representing you and the lender during the acquisition. Your attorney advises you, while the lender's attorney drafts loan documents and ensures compliance.","url":"https://dealroom.so/glossary/legal-fees","official_sources":[],"related":[{"slug":"closing-documents","url":"https://dealroom.so/glossary/closing-documents"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"environmental-reports","term":"Environmental reports","group":"Reading the business","definition":"Assessments of a property's environmental condition, identifying potential contamination or regulatory compliance issues. These are crucial if the business owns or leases real estate.","url":"https://dealroom.so/glossary/environmental-reports","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"phase-i-environmental-report","url":"https://dealroom.so/glossary/phase-i-environmental-report"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"owner-occupied-commercial-real-estate","url":"https://dealroom.so/glossary/owner-occupied-commercial-real-estate"}]},{"slug":"lender-fees","term":"Lender fees","group":"The loan itself","definition":"Various charges imposed by the bank for processing, underwriting, and closing your SBA 7(a) loan. These are distinct from the SBA's guaranty fee.","url":"https://dealroom.so/glossary/lender-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-administrative-fees","url":"https://dealroom.so/glossary/lender-administrative-fees"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"loan-estimate","url":"https://dealroom.so/glossary/loan-estimate"}]},{"slug":"phase-i-environmental-report","term":"Phase I environmental report","aka":"Phase I Environmental Site Assessment","group":"Reading the business","definition":"An initial environmental assessment of a property to identify potential contamination (Recognized Environmental Conditions). It involves site inspection and records review, not soil testing.","url":"https://dealroom.so/glossary/phase-i-environmental-report","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"environmental-reports","url":"https://dealroom.so/glossary/environmental-reports"},{"slug":"environmental-consultant","url":"https://dealroom.so/glossary/environmental-consultant"},{"slug":"recognized-environmental-condition","url":"https://dealroom.so/glossary/recognized-environmental-condition"},{"slug":"phase-ii-environmental-site-assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"}]},{"slug":"loan-estimate","term":"Loan estimate","group":"The loan itself","definition":"A document from the lender outlining the estimated costs, interest rate, and terms of your SBA 7(a) loan. It helps you understand the total expense of financing.","url":"https://dealroom.so/glossary/loan-estimate","official_sources":[],"related":[{"slug":"lender-fees","url":"https://dealroom.so/glossary/lender-fees"},{"slug":"upfront-guaranty-fee","url":"https://dealroom.so/glossary/upfront-guaranty-fee"},{"slug":"interest-only-payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"prepayment-penalty","url":"https://dealroom.so/glossary/prepayment-penalty"}]},{"slug":"eligible-business","term":"Eligible business","group":"The loan itself","definition":"A business that meets the SBA's specific criteria for receiving a 7(a) loan, including size standards, legal structure, and type of operations.","url":"https://dealroom.so/glossary/eligible-business","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"ineligible-businesses-rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"size-standard","url":"https://dealroom.so/glossary/size-standard"},{"slug":"naics-code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"financial-covenants","term":"Financial covenants","group":"The loan itself","definition":"Conditions set by the lender that the business must meet periodically (e.g., maintaining a certain debt service coverage ratio or working capital level) to remain in compliance with loan terms.","url":"https://dealroom.so/glossary/financial-covenants","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","url":"https://dealroom.so/glossary/dscr"},{"slug":"working-capital","url":"https://dealroom.so/glossary/working-capital"},{"slug":"loan-agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","url":"https://dealroom.so/glossary/loan-default"}]},{"slug":"loan-narrative","term":"Loan narrative","group":"People and paperwork","definition":"A written summary prepared by the lender that tells the story of your business acquisition, detailing the business's background, your experience, and how the loan funds will be used.","url":"https://dealroom.so/glossary/loan-narrative","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow-projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}]},{"slug":"conditional-guaranty","term":"Conditional guaranty","group":"The loan itself","definition":"An SBA guaranty where the lender's ability to collect from the SBA is subject to specific conditions being met. The SBA might reduce its payout if the lender did not follow all procedures.","url":"https://dealroom.so/glossary/conditional-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"full-guaranty","url":"https://dealroom.so/glossary/full-guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"servicing-deficiency","url":"https://dealroom.so/glossary/servicing-deficiency"},{"slug":"guaranty-purchase-request","url":"https://dealroom.so/glossary/guaranty-purchase-request"}]},{"slug":"full-guaranty","term":"Full guaranty","group":"The loan itself","definition":"This refers to the SBA's promise to reimburse a lender for a specific percentage of a defaulted loan, up to the maximum allowable amount. It's never 100%, despite the name.","url":"https://dealroom.so/glossary/full-guaranty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"conditional-guaranty","url":"https://dealroom.so/glossary/conditional-guaranty"},{"slug":"sba-guaranty","url":"https://dealroom.so/glossary/sba-guaranty"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"}]},{"slug":"lender-administrative-fees","term":"Lender administrative fees","group":"The loan itself","definition":"Costs charged by the bank for setting up and managing your SBA 7(a) loan, including processing, underwriting, and closing expenses. These add to your total financing costs.","url":"https://dealroom.so/glossary/lender-administrative-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lender-fees","url":"https://dealroom.so/glossary/lender-fees"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"origination-fees","term":"Origination Fees","group":"The loan itself","definition":"Fees charged by the lender for processing and closing your loan. These add to your total project costs, so know what you're paying.","url":"https://dealroom.so/glossary/origination-fees","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"lender-closing-costs","url":"https://dealroom.so/glossary/lender-closing-costs"},{"slug":"packaging-fee","url":"https://dealroom.so/glossary/packaging-fee"},{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"co-borrowers","term":"Co-Borrowers","group":"People and paperwork","definition":"Individuals who jointly apply for and are equally responsible for repaying the loan. For a small business acquisition, this usually means all active owners.","url":"https://dealroom.so/glossary/co-borrowers","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"sba-form-1919","title":"SBA Form 1919 — Borrower Information Form","official_url":"https://www.sba.gov/document/sba-form-1919-borrower-information-form","official_label":"View on SBA.gov","authority_tier":4,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sba-form-1919"}],"related":[{"slug":"co-guarantors","url":"https://dealroom.so/glossary/co-guarantors"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"form-1919","url":"https://dealroom.so/glossary/form-1919"},{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}]},{"slug":"co-guarantors","term":"Co-Guarantors","group":"People and paperwork","definition":"Individuals who agree to be personally responsible for the loan if the primary borrower defaults. This is common in SBA loans for all owners with 20% or more equity.","url":"https://dealroom.so/glossary/co-guarantors","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrowers","url":"https://dealroom.so/glossary/co-borrowers"}]},{"slug":"negative-tangible-net-worth","term":"Negative Tangible Net Worth","group":"Reading the business","definition":"When a business's tangible assets (like cash, equipment) are less than its liabilities. This often indicates heavy reliance on intangible assets or significant debt.","url":"https://dealroom.so/glossary/negative-tangible-net-worth","official_sources":[],"related":[{"slug":"goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"tangible-asset","url":"https://dealroom.so/glossary/tangible-asset"},{"slug":"balance-sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"business-valuation","url":"https://dealroom.so/glossary/business-valuation"}]},{"slug":"acquisition-loans","term":"Acquisition Loans","group":"The loan itself","definition":"Loans specifically designed to finance the purchase of an existing business. The SBA 7(a) loan is the most common type for small business acquisitions.","url":"https://dealroom.so/glossary/acquisition-loans","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"7a-loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"business-acquisition-loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"use-of-proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"total-project-costs","url":"https://dealroom.so/glossary/total-project-costs"}]},{"slug":"recurring-revenue","term":"Recurring Revenue","group":"Reading the business","definition":"Income that is predictable and likely to continue in the future, often from subscriptions, contracts, or repeat purchases. This is a strong indicator of business stability.","url":"https://dealroom.so/glossary/recurring-revenue","official_sources":[],"related":[{"slug":"cash-flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"profit-and-loss-statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"quality-of-earnings","url":"https://dealroom.so/glossary/quality-of-earnings"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"}]},{"slug":"quality-of-earnings","term":"Quality of Earnings","group":"Reading the business","definition":"An analysis that scrutinizes a business's financial statements to identify the true, sustainable earnings and remove non-recurring or discretionary items. This helps understand the business's actual profitability.","url":"https://dealroom.so/glossary/quality-of-earnings","official_sources":[],"related":[{"slug":"add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]},{"slug":"pass-through","term":"Pass-Through","group":"Reading the business","definition":"A business structure (like an S-Corp or LLC) where profits and losses are \"passed through\" directly to the owners' personal tax returns, avoiding corporate-level taxation.","url":"https://dealroom.so/glossary/pass-through","official_sources":[],"related":[{"slug":"llc","url":"https://dealroom.so/glossary/llc"},{"slug":"sde","url":"https://dealroom.so/glossary/sde"},{"slug":"tax-return","url":"https://dealroom.so/glossary/tax-return"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"}]},{"slug":"unpaid-tax-liens","term":"Unpaid Tax Liens","group":"Reading the business","definition":"A legal claim placed by a government entity (like the IRS) against a business's assets due to overdue taxes. These must be resolved before a business can be sold.","url":"https://dealroom.so/glossary/unpaid-tax-liens","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"lien","url":"https://dealroom.so/glossary/lien"},{"slug":"irs-transcripts","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"ucc-lien","url":"https://dealroom.so/glossary/ucc-lien"}]},{"slug":"target-business","term":"Target Business","group":"Doing the deal","definition":"The specific company you are looking to acquire. It's the focus of your search and due diligence efforts.","url":"https://dealroom.so/glossary/target-business","official_sources":[],"related":[{"slug":"nda-buyer-verification","url":"https://dealroom.so/glossary/nda-buyer-verification"},{"slug":"cim-deal-book","url":"https://dealroom.so/glossary/cim-deal-book"},{"slug":"loi","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","url":"https://dealroom.so/glossary/due-diligence"}]}],"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed per term.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Business Buying Glossary","url":"https://dealroom.so/glossary","source_type":"DealRoom Data"}}