{"ok":true,"canonical_url":"https://dealroom.so/glossary/principals","api_url":"https://dealroom.so/api/public/glossary/principals","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":"principals","term":"Principals","group":"People and paperwork","definition":"These are the key individuals who own 20% or more of the business, or those with significant management responsibilities, regardless of ownership percentage. As a buyer, you and any Co-borrower will be considered Principals, and the SBA will scrutinize your character and financial history.","what_it_means":"For an SBA loan, all Principals must provide Personal financial statement, tax returns, and undergo background checks (including a Felony Conviction check). Understand that your lender and the SBA will evaluate the character and Creditworthiness of every Principal involved in the transaction.","url":"https://dealroom.so/glossary/principals","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":"key-principal","term":"Key principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","term":"Co-borrower","url":"https://dealroom.so/glossary/co-borrower"},{"slug":"personal-financial-statement","term":"Personal financial statement","url":"https://dealroom.so/glossary/personal-financial-statement"},{"slug":"felony-conviction","term":"Felony Conviction","url":"https://dealroom.so/glossary/felony-conviction"}],"related_questions":[{"question":"When is life insurance on key principals a mandatory loan condition?","url":"https://dealroom.so/for-lenders/questions/when-is-life-insurance-on-key-principals-a-mandatory-loan-condition"},{"question":"When is life insurance required on key principals for an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-is-life-insurance-required-on-key-principals-for-an-sba-7-a-loan"},{"question":"What are the specific requirements for life insurance collateral assignment when multiple key principals exist?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-life-insurance-collateral-assignment-when-multiple-"},{"question":"How does a lender ensure proper collateral assignment of life insurance on multiple key principals?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-ensure-proper-collateral-assignment-of-life-insurance-on-multiple-key-pr"},{"question":"When is life insurance on key principals absolutely required for an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-is-life-insurance-on-key-principals-absolutely-required-for-an-sba-7-a-loan"},{"question":"When is life insurance collateral assignment required for key principals in an acquisition, and for whom?","url":"https://dealroom.so/sba-7a/questions/when-is-life-insurance-collateral-assignment-required-for-key-principals-in-an-acquisition"}]},"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 — Principals","url":"https://dealroom.so/glossary/principals","source_type":"DealRoom Data"}}