{"ok":true,"canonical_url":"https://dealroom.so/glossary/de-facto-ownership","api_url":"https://dealroom.so/api/public/glossary/de-facto-ownership","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":"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.","what_it_means":"The SBA scrutinizes arrangements where an individual or entity has significant influence or control over the borrower, despite not holding 20% or more formal equity. If you have \"negative control\" or common management with another business, the SBA may consider you a de facto owner, triggering affiliation rules and requiring a guaranty.","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","term":"Financial Interest","url":"https://dealroom.so/glossary/financial-interest"},{"slug":"affiliation","term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"negative-control","term":"Negative control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"key-principal","term":"Key principal","url":"https://dealroom.so/glossary/key-principal"}],"related_questions":[{"question":"What if a Phase I ESA identifies a Recognized Environmental Condition (REC) but deems it a 'de minimis' condition?","url":"https://dealroom.so/for-lenders/questions/what-if-a-phase-i-esa-identifies-a-recognized-environmental-condition-rec-but-deems-it-a-d"},{"question":"When does common ownership by an Employee Stock Ownership Plan (ESOP) trigger affiliation for size determination?","url":"https://dealroom.so/for-lenders/questions/when-does-common-ownership-by-an-employee-stock-ownership-plan-esop-trigger-affiliation-fo"},{"question":"How does the SBA handle a seller's retained ownership in a change-of-ownership transaction?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-handle-a-seller-s-retained-ownership-in-a-change-of-ownership-transaction"},{"question":"How does the SBA handle a seller's retained ownership in a 7(a) change-of-ownership transaction?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-handle-a-seller-s-retained-ownership-in-a-7-a-change-of-ownership-transac"},{"question":"Is previous business ownership or management experience required to qualify?","url":"https://dealroom.so/sba-loans/basics/is-previous-business-ownership-or-management-experience-required-to-qualify"},{"question":"Does a partner buyout require 100% ownership by the acquiring individual?","url":"https://dealroom.so/sba-7a/questions/does-a-partner-buyout-require-100-ownership-by-the-acquiring-individual"}]},"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 — De Facto Ownership","url":"https://dealroom.so/glossary/de-facto-ownership","source_type":"DealRoom Data"}}