{"ok":true,"canonical_url":"https://dealroom.so/glossary/active-involvement","api_url":"https://dealroom.so/api/public/glossary/active-involvement","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"],"term":{"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.","what_it_means":"If you're using an SBA 7(a) loan, you must demonstrate that you'll be running the business. This rules out absentee ownership or simply funding a manager. The SBA wants to support owner-operators.","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","term":"Investment business","url":"https://dealroom.so/glossary/investment-business"},{"slug":"key-principal","term":"Key principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"sole-proprietor","term":"Sole proprietor","url":"https://dealroom.so/glossary/sole-proprietor"}],"related_questions":[{"question":"How does the SBA define 'active ownership' for the 24-month rule?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-define-active-ownership-for-the-24-month-rule"},{"question":"Does the SBA 7(a) program have specific requirements for the seller's post-sale involvement in the business?","url":"https://dealroom.so/sba-7a/questions/does-the-sba-7-a-program-have-specific-requirements-for-the-seller-s-post-sale-involvement"},{"question":"For a partner buyout, if the exiting partner also provides a standby seller note, how does the SBA view their ongoing involvement?","url":"https://dealroom.so/sba-7a/questions/for-a-partner-buyout-if-the-exiting-partner-also-provides-a-standby-seller-note-how-does-t"},{"question":"Can an SBA 7(a) loan finance the buyout of a partner who will remain active in the business?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-the-buyout-of-a-partner-who-will-remain-active-in-the-business"},{"question":"Can a 7(a) loan finance a partial buyout where the seller retains a minority stake and remains active?","url":"https://dealroom.so/for-lenders/questions/can-a-7-a-loan-finance-a-partial-buyout-where-the-seller-retains-a-minority-stake-and-rema"},{"question":"What happens if a buyer for an SBA 7(a) loan has an active tax lien, even if on a payment plan?","url":"https://dealroom.so/sba-7a/questions/what-happens-if-a-buyer-for-an-sba-7-a-loan-has-an-active-tax-lien-even-if-on-a-payment-pl"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Active involvement","url":"https://dealroom.so/glossary/active-involvement","source_type":"DealRoom Data"}}