{"ok":true,"canonical_url":"https://dealroom.so/glossary/arm-s-length-terms","api_url":"https://dealroom.so/api/public/glossary/arm-s-length-terms","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":"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.","what_it_means":"For an SBA loan, all deal components, like seller notes, real estate leases, or asset purchases, must be on \"arm's-length terms.\" The lender will scrutinize any relationships to ensure no self-dealing or unfair pricing. Be prepared to justify all terms as market-rate.","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","term":"Self-dealing","url":"https://dealroom.so/glossary/self-dealing"},{"slug":"fair-market-value","term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"market-rent-analysis","term":"Market rent analysis","url":"https://dealroom.so/glossary/market-rent-analysis"},{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"}],"related_questions":[{"question":"What documents are needed to prove a partner buyout is an arm's length transaction for SBA purposes?","url":"https://dealroom.so/sba-7a/questions/what-documents-are-needed-to-prove-a-partner-buyout-is-an-arm-s-length-transaction-for-sba"},{"question":"What constitutes an acceptable 'arm's length transaction' for a change of ownership between related parties for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-an-acceptable-arm-s-length-transaction-for-a-change-of-ownership-between-"},{"question":"What are the specific requirements for a religious organization's business arm to be 7(a) eligible?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-a-religious-organization-s-business-arm-to-be-7-a-e"},{"question":"What is the average repayment term length for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-is-the-average-repayment-term-length-for-an-sba-7-a-loan"},{"question":"When must a lender obtain an E-Tran modification for changes to a 7(a) loan's terms?","url":"https://dealroom.so/for-lenders/questions/when-must-a-lender-obtain-an-e-tran-modification-for-changes-to-a-7-a-loan-s-terms"},{"question":"When is an E-Tran modification required for changes to a 7(a) loan's terms after initial authorization?","url":"https://dealroom.so/for-lenders/questions/when-is-an-e-tran-modification-required-for-changes-to-a-7-a-loan-s-terms-after-initial-au"}]},"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 — Arm's-length terms","url":"https://dealroom.so/glossary/arm-s-length-terms","source_type":"DealRoom Data"}}