{"ok":true,"canonical_url":"https://dealroom.so/glossary/commercially-reasonable","api_url":"https://dealroom.so/api/public/glossary/commercially-reasonable","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":"commercially-reasonable","term":"Commercially reasonable","group":"Doing the deal","definition":"This standard means an action or transaction must be fair and typical within the relevant industry, based on prevailing business practices. It ensures terms aren't designed to disadvantage any party.","what_it_means":"The SBA requires all aspects of a loan transaction, from asset valuations to seller note terms, to be commercially reasonable. This protects the integrity of the loan and ensures the deal reflects market value. Your due diligence should verify that all terms align with industry standards and market conditions.","url":"https://dealroom.so/glossary/commercially-reasonable","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","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","term":"Arm's length","url":"https://dealroom.so/glossary/arm-s-length"},{"slug":"fair-market-value","term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"business-valuation","term":"Business valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"}],"related_questions":[{"question":"What constitutes \"commercially reasonable\" efforts by a lender in liquidating collateral for a defaulted 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-commercially-reasonable-efforts-by-a-lender-in-liquidating-collateral-for"},{"question":"What specific documentation is required for a lender to prove 'commercially reasonable' disposition of collateral during 7(a) loan liquidation?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-for-a-lender-to-prove-commercially-reasonable-disp"},{"question":"When a lender is liquidating collateral for a 7(a) loan, what are the specific requirements for proving \"commercially reasonable\" disposition?","url":"https://dealroom.so/for-lenders/questions/when-a-lender-is-liquidating-collateral-for-a-7-a-loan-what-are-the-specific-requirements-"},{"question":"How does the SBA ensure the valuation of goodwill is reasonable for an acquisition loan?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-ensure-the-valuation-of-goodwill-is-reasonable-for-an-acquisition-loan"},{"question":"How does the SBA determine if the purchase price for a business acquisition is reasonable?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-determine-if-the-purchase-price-for-a-business-acquisition-is-reasonable"},{"question":"How does the SBA ensure the purchase price allocation to goodwill is reasonable for an acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-ensure-the-purchase-price-allocation-to-goodwill-is-reasonable-for-an-acq"}]},"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 — Commercially reasonable","url":"https://dealroom.so/glossary/commercially-reasonable","source_type":"DealRoom Data"}}