{"ok":true,"canonical_url":"https://dealroom.so/glossary/managerial-discretion","api_url":"https://dealroom.so/api/public/glossary/managerial-discretion","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":"managerial-discretion","term":"Managerial discretion","group":"Reading the business","definition":"This refers to the freedom a business owner or manager has to make independent decisions about how the business operates. The SBA requires this for a business to be considered an active enterprise.","what_it_means":"For a 7(a) loan, the business must not be subject to undue control by another entity, especially if that entity is an ineligible business or a passive investor. Your lender will confirm that you, as the new owner, will have the necessary managerial discretion to run the business independently, ensuring it's not merely a pass-through or a captive operation.","url":"https://dealroom.so/glossary/managerial-discretion","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"}],"related":[{"slug":"active-enterprise","term":"Active enterprise","url":"https://dealroom.so/glossary/active-enterprise"},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"affiliation","term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"negative-control","term":"Negative control","url":"https://dealroom.so/glossary/negative-control"}],"related_questions":[]},"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 — Managerial discretion","url":"https://dealroom.so/glossary/managerial-discretion","source_type":"DealRoom Data"}}