{"ok":true,"canonical_url":"https://dealroom.so/glossary/passive-investment","api_url":"https://dealroom.so/api/public/glossary/passive-investment","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":"passive-investment","term":"Passive Investment","group":"The loan itself","definition":"An SBA loan generally cannot be used to fund a business where the owner isn't actively involved in daily operations. The SBA wants to support active small business owners.","what_it_means":"The 7(a) loan program is designed for operating businesses, not just holding investments. As the buyer, you must demonstrate you will actively manage and operate the business. If the business you're buying is primarily real estate or investment-focused with no active operations, it's likely ineligible.","url":"https://dealroom.so/glossary/passive-investment","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":"speculation","term":"Speculation","url":"https://dealroom.so/glossary/speculation"},{"slug":"passive-activity","term":"Passive Activity","url":"https://dealroom.so/glossary/passive-activity"},{"slug":"7a-loan","term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"}],"related_questions":[{"question":"Can an SBA 7(a) loan be used to buy stock or passive investments?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-be-used-to-buy-stock-or-passive-investments"},{"question":"Can an SBA 7(a) loan be used for speculative investments or passive real estate?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-be-used-for-speculative-investments-or-passive-real-estate"},{"question":"Can an SBA 7(a) loan be used to acquire a business that is primarily an investment or passive real estate holding company?","url":"https://dealroom.so/for-lenders/questions/can-an-sba-7-a-loan-be-used-to-acquire-a-business-that-is-primarily-an-investment-or-passi"},{"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":"Are proceeds from personal investment sales eligible for equity injection?","url":"https://dealroom.so/sba-7a/questions/are-proceeds-from-personal-investment-sales-eligible-for-equity-injection"},{"question":"What if the acquired business primarily generates revenue from passive rental income?","url":"https://dealroom.so/sba-7a/questions/what-if-the-acquired-business-primarily-generates-revenue-from-passive-rental-income"}]},"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 — Passive Investment","url":"https://dealroom.so/glossary/passive-investment","source_type":"DealRoom Data"}}