{"ok":true,"canonical_url":"https://dealroom.so/glossary/related-party-transaction","api_url":"https://dealroom.so/api/public/glossary/related-party-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":"related-party-transaction","term":"Related-Party Transaction","group":"Doing the deal","definition":"A business deal between two parties who have a relationship that could potentially influence the terms of the transaction, such as family members, affiliated businesses, or common ownership.","what_it_means":"SBA guidelines generally prohibit lending for related-party transactions unless very strict conditions are met, as they do not typically represent fair market value. If you are attempting to buy a business from a family member or an entity you already control, expect significant scrutiny or an outright denial from SBA lenders. This rule aims to prevent fraud and ensure market-based pricing.","url":"https://dealroom.so/glossary/related-party-transaction","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":"arm-s-length-transaction","term":"Arm's-Length Transaction","url":"https://dealroom.so/glossary/arm-s-length-transaction"},{"slug":"common-management","term":"Common management","url":"https://dealroom.so/glossary/common-management"},{"slug":"affiliation","term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"fair-market-value","term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"}],"related_questions":[{"question":"When is an independent business valuation required for an SBA 7(a) acquisition, especially for related party transactions?","url":"https://dealroom.so/sba-7a/questions/when-is-an-independent-business-valuation-required-for-an-sba-7-a-acquisition-especially-f"},{"question":"What constitutes an acceptable 'arm's length transaction' for a change of ownership between related parties for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-an-acceptable-arm-s-length-transaction-for-a-change-of-ownership-between-"},{"question":"Why does the SBA combine the size of related businesses when checking loan eligibility?","url":"https://dealroom.so/sba-loans/basics/why-does-the-sba-combine-the-size-of-related-businesses-when-checking-loan-eligibility"},{"question":"How does a lender prevent a guaranty denial related to undisclosed affiliations identified post-closing?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-prevent-a-guaranty-denial-related-to-undisclosed-affiliations-identified"},{"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":"Can a third-party loan, not from the seller, count towards the minimum equity injection?","url":"https://dealroom.so/sba-7a/questions/can-a-third-party-loan-not-from-the-seller-count-towards-the-minimum-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 — Related-Party Transaction","url":"https://dealroom.so/glossary/related-party-transaction","source_type":"DealRoom Data"}}