{"ok":true,"canonical_url":"https://dealroom.so/glossary/negative-control","api_url":"https://dealroom.so/api/public/glossary/negative-control","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":"negative-control","term":"Negative control","group":"Reading the business","definition":"Negative control refers to the ability of a minority owner to block significant actions of a business. This is crucial for buyers because the SBA considers anyone with negative control a \"key principal\" requiring a personal guarantee.","what_it_means":"Even if you don't own a majority, if your operating agreement gives you veto power over major decisions, the SBA views you as having negative control. Ensure you understand all ownership structures and rights, as this determines who must personally guarantee the loan. Clarify these provisions during due diligence.","url":"https://dealroom.so/glossary/negative-control","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":"key-principal","term":"Key principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","term":"Guaranty","url":"https://dealroom.so/glossary/guaranty"}],"related_questions":[{"question":"What if the business I'm acquiring has *negative goodwill*?","url":"https://dealroom.so/sba-loans/basics/what-if-the-business-i-m-acquiring-has-negative-goodwill"},{"question":"What if the business I'm acquiring has significant negative working capital at closing?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-has-significant-negative-working-capital-at-closing"},{"question":"How does negative working capital at the time of acquisition impact SBA 7(a) loan eligibility?","url":"https://dealroom.so/sba-7a/questions/how-does-negative-working-capital-at-the-time-of-acquisition-impact-sba-7-a-loan-eligibili"},{"question":"Can I use an SBA 7(a) loan to purchase a business with a negative net worth?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-purchase-a-business-with-a-negative-net-worth"},{"question":"Can an SBA 7(a) loan be used to purchase a business with a negative net worth?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-be-used-to-purchase-a-business-with-a-negative-net-worth"},{"question":"How does the SBA define 'total control' rule to determine affiliation for size standards?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-total-control-rule-to-determine-affiliation-for-size-standards"}]},"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 — Negative control","url":"https://dealroom.so/glossary/negative-control","source_type":"DealRoom Data"}}