{"ok":true,"canonical_url":"https://dealroom.so/glossary/multi-level-marketing-company","api_url":"https://dealroom.so/api/public/glossary/multi-level-marketing-company","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":"multi-level-marketing-company","term":"Multi-Level Marketing Company","aka":"MLM","group":"The loan itself","definition":"A business model where participants sell products and also earn commissions from sales made by people they recruit. While often legal, the SBA has specific rules for financing them.","what_it_means":"The SBA can finance an MLM if its primary revenue comes from product sales to end-users, not just recruitment. Lenders will examine the compensation plan to ensure it's not a pyramid scheme in disguise. Understand the SBA's 'not engaged in lending' rule and 'ineligible businesses rule' when considering an MLM.","url":"https://dealroom.so/glossary/multi-level-marketing-company","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":"pyramid-scheme","term":"Pyramid Scheme","url":"https://dealroom.so/glossary/pyramid-scheme"},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"not-engaged-in-lending-rule","term":"Not engaged in lending rule","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule"},{"slug":"business-plan","term":"Business plan","url":"https://dealroom.so/glossary/business-plan"}],"related_questions":[{"question":"Can a business engaged in multi-level marketing (MLM) be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-business-engaged-in-multi-level-marketing-mlm-be-eligible-for-a-7-a-loan"},{"question":"How does the SBA evaluate the eligibility of an applicant business involved in multi-level marketing or pyramid sales schemes?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-evaluate-the-eligibility-of-an-applicant-business-involved-in-multi-level"},{"question":"Is it necessary to obtain separate life insurance policies for each owner in a multi-owner business?","url":"https://dealroom.so/sba-7a/questions/is-it-necessary-to-obtain-separate-life-insurance-policies-for-each-owner-in-a-multi-owner"},{"question":"What level of environmental due diligence is required for leasehold improvements only, without real estate acquisition?","url":"https://dealroom.so/for-lenders/questions/what-level-of-environmental-due-diligence-is-required-for-leasehold-improvements-only-with"},{"question":"Are marketing and advertising expenses allowed uses for 7(a) loan funds?","url":"https://dealroom.so/sba-loans/basics/are-marketing-and-advertising-expenses-allowed-uses-for-7-a-loan-funds"},{"question":"What level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?","url":"https://dealroom.so/sba-7a/questions/what-level-of-debt-service-coverage-ratio-dscr-does-an-sba-7-a-lender-typically-look-for"}]},"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 — Multi-Level Marketing Company","url":"https://dealroom.so/glossary/multi-level-marketing-company","source_type":"DealRoom Data"}}