{"ok":true,"canonical_url":"https://dealroom.so/glossary/shell-company","api_url":"https://dealroom.so/api/public/glossary/shell-company","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":"shell-company","term":"Shell Company","group":"People and paperwork","definition":"A company that exists legally but has no significant assets, operations, or employees. It's often used for financial maneuvering or to obscure ownership.","what_it_means":"The SBA has strict rules against using 7(a) loans for businesses that are merely shell companies. Your target business must be an operating concern with demonstrable assets, employees, and revenue-generating activities to qualify. Lenders will verify this during underwriting.","url":"https://dealroom.so/glossary/shell-company","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":"underwriting","term":"Underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"use-of-proceeds","term":"Use of proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"business-plan","term":"Business plan","url":"https://dealroom.so/glossary/business-plan"}],"related_questions":[{"question":"Are business life insurance premiums generally tax deductible for the company?","url":"https://dealroom.so/sba-7a/questions/are-business-life-insurance-premiums-generally-tax-deductible-for-the-company"},{"question":"Can an SBA 7(a) loan help me acquire another company?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-help-me-acquire-another-company"},{"question":"What distinguishes a company redemption from a cross-purchase buyout for SBA?","url":"https://dealroom.so/sba-7a/questions/what-distinguishes-a-company-redemption-from-a-cross-purchase-buyout-for-sba"},{"question":"Does my business need to be a for-profit company to qualify?","url":"https://dealroom.so/sba-loans/basics/does-my-business-need-to-be-a-for-profit-company-to-qualify"},{"question":"Can the company itself redeem the departing partner's shares with an SBA loan?","url":"https://dealroom.so/sba-7a/questions/can-the-company-itself-redeem-the-departing-partner-s-shares-with-an-sba-loan"},{"question":"What happens if my business real estate is owned separately from my operating company?","url":"https://dealroom.so/sba-loans/basics/what-happens-if-my-business-real-estate-is-owned-separately-from-my-operating-company"}]},"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 — Shell Company","url":"https://dealroom.so/glossary/shell-company","source_type":"DealRoom Data"}}