{"ok":true,"canonical_url":"https://dealroom.so/glossary/non-compete","api_url":"https://dealroom.so/api/public/glossary/non-compete","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":"non-compete","term":"Non-compete","group":"People and paperwork","definition":"The seller's promise to stay out of the same business nearby for a set time. Standard in every purchase agreement; lenders expect it.","what_it_means":"The non-compete clause prevents the seller from opening a competing business, poaching employees, or contacting former customers for a defined period — typically two to five years within a defined geography. Lenders require non-competes because the business's goodwill (which they're partly financing) would evaporate if the seller immediately went across the street. Negotiate the geographic scope and duration carefully; courts in some states won't enforce overly broad non-competes.","url":"https://dealroom.so/glossary/non-compete","official_sources":[],"related":[{"slug":"goodwill","term":"Goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"loi","term":"LOI","url":"https://dealroom.so/glossary/loi"},{"slug":"key-man-insurance","term":"Key man insurance","url":"https://dealroom.so/glossary/key-man-insurance"}],"related_questions":[{"question":"For a partner buyout, what if the departing partner also has a non-compete payment?","url":"https://dealroom.so/sba-7a/questions/for-a-partner-buyout-what-if-the-departing-partner-also-has-a-non-compete-payment"},{"question":"Does the departing partner need to sign a non-compete agreement for an SBA-financed buyout?","url":"https://dealroom.so/sba-7a/questions/does-the-departing-partner-need-to-sign-a-non-compete-agreement-for-an-sba-financed-buyout"},{"question":"What is the importance of a non-compete agreement from the seller in an SBA 7(a) acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-importance-of-a-non-compete-agreement-from-the-seller-in-an-sba-7-a-acquisitio"},{"question":"Can I include the cost of a non-compete agreement with the seller in my SBA 7(a) loan?","url":"https://dealroom.so/sba-7a/questions/can-i-include-the-cost-of-a-non-compete-agreement-with-the-seller-in-my-sba-7-a-loan"},{"question":"Are funds from a non-U.S. citizen or non-resident investor acceptable for equity injection?","url":"https://dealroom.so/sba-7a/questions/are-funds-from-a-non-u-s-citizen-or-non-resident-investor-acceptable-for-equity-injection"},{"question":"Are non-owner spouses always required to personally guarantee SBA loans?","url":"https://dealroom.so/sba-7a/questions/are-non-owner-spouses-always-required-to-personally-guarantee-sba-loans"}]},"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 — Non-compete","url":"https://dealroom.so/glossary/non-compete","source_type":"DealRoom Data"}}