{"ok":true,"canonical_url":"https://dealroom.so/glossary/not-engaged-in-lending-rule","api_url":"https://dealroom.so/api/public/glossary/not-engaged-in-lending-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":"not-engaged-in-lending-rule","term":"Not engaged in lending rule","group":"Reading the business","definition":"This SBA rule states that businesses primarily engaged in lending, such as banks or loan companies, are ineligible for 7(a) loans. It ensures SBA funding supports operating businesses, not financial intermediaries.","what_it_means":"When evaluating a target business, verify its primary activities and NAICS code to ensure it doesn't fall under the 'not engaged in lending' exclusion. Businesses that derive more than 50% of their revenue from lending or passive investments are generally ineligible. This is a fundamental eligibility check you must make early.","url":"https://dealroom.so/glossary/not-engaged-in-lending-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":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"naics-code","term":"NAICS code","url":"https://dealroom.so/glossary/naics-code"},{"slug":"size-standard","term":"Size standard","url":"https://dealroom.so/glossary/size-standard"}],"related_questions":[{"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":"Can a business primarily engaged in lending or investment be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-business-primarily-engaged-in-lending-or-investment-be-eligible-for-a-7-a-loan"},{"question":"Can a business primarily engaged in lending or passive investments qualify for an SBA 7(a) loan?","url":"https://dealroom.so/sba-7a/questions/can-a-business-primarily-engaged-in-lending-or-passive-investments-qualify-for-an-sba-7-a-"},{"question":"Does the SBA allow a business primarily engaged in lending or investments to be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/does-the-sba-allow-a-business-primarily-engaged-in-lending-or-investments-to-be-eligible-f"},{"question":"What specific criteria must an entity meet to be considered 'engaged in lending' and thus ineligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-criteria-must-an-entity-meet-to-be-considered-engaged-in-lending-and-thus-in"},{"question":"Can a business engaged in political lobbying be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-business-engaged-in-political-lobbying-be-eligible-for-a-7-a-loan"}]},"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 — Not engaged in lending rule","url":"https://dealroom.so/glossary/not-engaged-in-lending-rule","source_type":"DealRoom Data"}}