{"ok":true,"canonical_url":"https://dealroom.so/glossary/impermissible-distribution","api_url":"https://dealroom.so/api/public/glossary/impermissible-distribution","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":"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.","what_it_means":"Your SBA loan agreement will likely have covenants restricting distributions from the business, especially in the early years. The SBA wants cash flow to go towards debt service and business growth, not into your personal pocket prematurely. Violating this can lead to a default and puts your personal guarantee at risk.","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","term":"Loan agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"loan-default","term":"Loan default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"debt-service","term":"Debt service","url":"https://dealroom.so/glossary/debt-service"}],"related_questions":[{"question":"How does a lender determine if a franchise agreement contains impermissible control provisions not listed on the Directory?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-determine-if-a-franchise-agreement-contains-impermissible-control-provis"},{"question":"Can life insurance be used to ensure fair distribution of assets among non-active heirs in a family business?","url":"https://dealroom.so/sba-7a/questions/can-life-insurance-be-used-to-ensure-fair-distribution-of-assets-among-non-active-heirs-in"}]},"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 — Impermissible Distribution","url":"https://dealroom.so/glossary/impermissible-distribution","source_type":"DealRoom Data"}}