{"ok":true,"canonical_url":"https://dealroom.so/glossary/no-control-rule","api_url":"https://dealroom.so/api/public/glossary/no-control-rule","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":"no-control-rule","term":"No Control Rule","group":"Reading the business","definition":"An SBA eligibility requirement stating that a business, to be eligible for an SBA loan, must not be controlled by another entity that itself is not eligible. This often applies to franchisors or other affiliates.","what_it_means":"This rule is critical for franchise acquisitions. It ensures the borrower has actual control over the business, not an ineligible third party like a franchisor. The SBA will scrutinize your franchise agreement to confirm you have independent decision-making authority, especially regarding management and operations, to avoid any \"negative control\" by the franchisor or other affiliates.","url":"https://dealroom.so/glossary/no-control-rule","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":"franchisor-control","term":"Franchisor Control","url":"https://dealroom.so/glossary/franchisor-control"},{"slug":"negative-control","term":"Negative control","url":"https://dealroom.so/glossary/negative-control"},{"slug":"franchise-agreement","term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"}],"related_questions":[{"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"},{"question":"How does the SBA define 'active ownership' for the 24-month rule?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-define-active-ownership-for-the-24-month-rule"},{"question":"How does the 'franchise rule' affect affiliation calculations for SBA 7(a) eligibility?","url":"https://dealroom.so/for-lenders/questions/how-does-the-franchise-rule-affect-affiliation-calculations-for-sba-7-a-eligibility"},{"question":"How does the 'not engaged in lending' rule apply to a loan applicant?","url":"https://dealroom.so/for-lenders/questions/how-does-the-not-engaged-in-lending-rule-apply-to-a-loan-applicant"},{"question":"What is the 24-month ownership rule for a $0-down SBA partner buyout?","url":"https://dealroom.so/sba-7a/questions/what-is-the-24-month-ownership-rule-for-a-0-down-sba-partner-buyout"},{"question":"How does the SBA's \"all available collateral\" rule apply when business assets are limited?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-s-all-available-collateral-rule-apply-when-business-assets-are-limited"}]},"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 — No Control Rule","url":"https://dealroom.so/glossary/no-control-rule","source_type":"DealRoom Data"}}