{"ok":true,"canonical_url":"https://dealroom.so/glossary/prohibited-transaction","api_url":"https://dealroom.so/api/public/glossary/prohibited-transaction","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":"prohibited-transaction","term":"Prohibited Transaction","group":"People and paperwork","definition":"This is a transaction involving an ERISA-governed retirement plan (like a 401k) that is deemed illegal due to a conflict of interest. Buyers using a ROBS structure must strictly avoid these to protect their retirement funds from severe penalties.","what_it_means":"If you're funding your equity injection with a Rollover for Business Startups (ROBS) plan, the IRS and Department of Labor prohibit certain dealings between your retirement plan and you or your business. For example, your ROBS plan cannot lend money to you personally. Work with a ROBS specialist to ensure strict compliance.","url":"https://dealroom.so/glossary/prohibited-transaction","official_sources":[],"related":[{"slug":"robs","term":"ROBS","url":"https://dealroom.so/glossary/robs"},{"slug":"erisa-rules","term":"ERISA Rules","url":"https://dealroom.so/glossary/erisa-rules"},{"slug":"seasoned-funds","term":"Seasoned funds","url":"https://dealroom.so/glossary/seasoned-funds"},{"slug":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"}],"related_questions":[{"question":"What specific types of businesses are prohibited from getting an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-specific-types-of-businesses-are-prohibited-from-getting-an-sba-7-a-loan"},{"question":"Are there any specific business industries that are generally prohibited from getting an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/are-there-any-specific-business-industries-that-are-generally-prohibited-from-getting-an-s"},{"question":"If a seller note is on standby, is the seller prohibited from any post-sale employment with the business?","url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-standby-is-the-seller-prohibited-from-any-post-sale-employment-with"},{"question":"Who actually lends the money in an SBA 7(a) loan transaction?","url":"https://dealroom.so/sba-loans/basics/who-actually-lends-the-money-in-an-sba-7-a-loan-transaction"},{"question":"When is a business valuation required for a change of ownership transaction exceeding $500,000?","url":"https://dealroom.so/for-lenders/questions/when-is-a-business-valuation-required-for-a-change-of-ownership-transaction-exceeding-500-"},{"question":"When is a business appraisal required for a change of ownership transaction exceeding $500,000?","url":"https://dealroom.so/for-lenders/questions/when-is-a-business-appraisal-required-for-a-change-of-ownership-transaction-exceeding-500-"}]},"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 — Prohibited Transaction","url":"https://dealroom.so/glossary/prohibited-transaction","source_type":"DealRoom Data"}}