{"ok":true,"canonical_url":"https://dealroom.so/glossary/retained-equity","api_url":"https://dealroom.so/api/public/glossary/retained-equity","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":"retained-equity","term":"Retained equity","group":"Your money in the deal","definition":"The portion of the seller's ownership in the business that they keep after the sale. This is uncommon in SBA 7(a) deals, as the SBA generally requires a complete change of ownership.","what_it_means":"While rare, if a seller retains equity, it complicates the SBA's 'change of ownership' rules and can trigger affiliation concerns if the seller retains 'undue control.' The SBA wants the buyer to fully own and operate the business. Generally, avoid structures where the seller retains equity in an SBA deal.","url":"https://dealroom.so/glossary/retained-equity","official_sources":[{"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"},{"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"}],"related":[{"slug":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"undue-control","term":"Undue control","url":"https://dealroom.so/glossary/undue-control"},{"slug":"operational-control","term":"Operational control","url":"https://dealroom.so/glossary/operational-control"},{"slug":"affiliation","term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"}],"related_questions":[{"question":"Can a business's retained earnings count as equity injection?","url":"https://dealroom.so/sba-loans/basics/can-a-business-s-retained-earnings-count-as-equity-injection"},{"question":"Can I use my business's retained earnings from a prior venture as equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-my-business-s-retained-earnings-from-a-prior-venture-as-equity-injection"},{"question":"If the seller holds a minority stake (e.g., 5%) after the acquisition, does their retained equity count towards my 10% injection?","url":"https://dealroom.so/sba-7a/questions/if-the-seller-holds-a-minority-stake-e-g-5-after-the-acquisition-does-their-retained-equit"},{"question":"How does the SBA view a seller's retained ownership after an acquisition?","url":"https://dealroom.so/sba-loans/basics/how-does-the-sba-view-a-seller-s-retained-ownership-after-an-acquisition"},{"question":"How does the SBA handle a seller's retained ownership in a change-of-ownership transaction?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-handle-a-seller-s-retained-ownership-in-a-change-of-ownership-transaction"},{"question":"How does the SBA handle a seller's retained ownership in a 7(a) change-of-ownership transaction?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-handle-a-seller-s-retained-ownership-in-a-7-a-change-of-ownership-transac"}]},"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 — Retained equity","url":"https://dealroom.so/glossary/retained-equity","source_type":"DealRoom Data"}}