{"ok":true,"canonical_url":"https://dealroom.so/glossary/tax-exempt-status","api_url":"https://dealroom.so/api/public/glossary/tax-exempt-status","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":"tax-exempt-status","term":"Tax-Exempt Status","group":"Reading the business","definition":"A legal designation, usually for non-profit organizations, that exempts them from paying certain federal, state, or local taxes. This status prevents the business from being eligible for an SBA 7(a) loan.","what_it_means":"SBA 7(a) loans are strictly for for-profit businesses. If the business you're looking at has Tax-Exempt Status, it's ineligible for an SBA loan, regardless of how strong its finances appear. Confirm the business's for-profit status early in your due diligence to avoid wasted effort.","url":"https://dealroom.so/glossary/tax-exempt-status","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":"non-profit-organization","term":"Non-profit organization","url":"https://dealroom.so/glossary/non-profit-organization"},{"slug":"eligibility-rule","term":"Eligibility Rule","url":"https://dealroom.so/glossary/eligibility-rule"},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"}],"related_questions":[{"question":"Are all individuals with 19% ownership or less exempt from personal guaranties?","url":"https://dealroom.so/sba-7a/questions/are-all-individuals-with-19-ownership-or-less-exempt-from-personal-guaranties"},{"question":"What factors allow a non-owner spouse to be exempt from personally guaranteeing a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-factors-allow-a-non-owner-spouse-to-be-exempt-from-personally-guaranteeing-a-7-a-loan"},{"question":"What if the business I'm acquiring has pending tax audits or unresolved tax issues?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-has-pending-tax-audits-or-unresolved-tax-issues"},{"question":"What specific criteria must be met for a joint venture to be exempt from affiliation rules for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-criteria-must-be-met-for-a-joint-venture-to-be-exempt-from-affiliation-rules"},{"question":"Do unfiled tax returns or overdue taxes prevent SBA approval?","url":"https://dealroom.so/sba-7a/questions/do-unfiled-tax-returns-or-overdue-taxes-prevent-sba-approval"},{"question":"What does 'Preferred Lender Program' (PLP) status mean for a bank?","url":"https://dealroom.so/sba-loans/basics/what-does-preferred-lender-program-plp-status-mean-for-a-bank"}]},"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 — Tax-Exempt Status","url":"https://dealroom.so/glossary/tax-exempt-status","source_type":"DealRoom Data"}}