{"ok":true,"canonical_url":"https://dealroom.so/glossary/non-compete-agreement","api_url":"https://dealroom.so/api/public/glossary/non-compete-agreement","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-agreement","term":"Non-Compete Agreement","aka":"Non-compete","group":"People and paperwork","definition":"A contract preventing the seller from starting or working for a competing business for a set period within a defined geographic area. This protects your investment by ensuring the seller doesn't immediately become a rival.","what_it_means":"A strong non-compete is critical in a small business acquisition to protect the goodwill you're buying. Ensure the terms (duration, geography, scope) are reasonable and enforceable in your state. The SBA allows up to $500,000 of the loan proceeds to pay for the non-compete.","url":"https://dealroom.so/glossary/non-compete-agreement","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":"non-compete-payment","term":"Non-Compete Payment","url":"https://dealroom.so/glossary/non-compete-payment"},{"slug":"loan-documents","term":"Loan Documents","url":"https://dealroom.so/glossary/loan-documents"},{"slug":"goodwill","term":"Goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"}],"related_questions":[{"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":"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":"What specific language must a non-SBA third-party standby agreement include to ensure eligibility?","url":"https://dealroom.so/for-lenders/questions/what-specific-language-must-a-non-sba-third-party-standby-agreement-include-to-ensure-elig"},{"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"}]},"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 Agreement","url":"https://dealroom.so/glossary/non-compete-agreement","source_type":"DealRoom Data"}}