{"ok":true,"canonical_url":"https://dealroom.so/glossary/trade-or-business","api_url":"https://dealroom.so/api/public/glossary/trade-or-business","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":"trade-or-business","term":"Trade or business","group":"People and paperwork","definition":"This term refers to any activity carried on for livelihood or profit. For SBA purposes, it must be an operating, for-profit entity, not passive investments.","what_it_means":"The SBA requires the loan proceeds to be used for a legitimate \"trade or business\" operation. This excludes passive investments or speculative activities. Ensure the business you're buying is actively engaged in commercial operations to meet this eligibility criterion.","url":"https://dealroom.so/glossary/trade-or-business","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"}],"related":[{"slug":"for-profit-small-business","term":"For-profit small business","url":"https://dealroom.so/glossary/for-profit-small-business"},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"small-business-concern","term":"Small business concern","url":"https://dealroom.so/glossary/small-business-concern"}],"related_questions":[{"question":"Can a 7(a) loan finance the purchase of intangible assets like customer lists or trade secrets in a business acquisition?","url":"https://dealroom.so/for-lenders/questions/can-a-7-a-loan-finance-the-purchase-of-intangible-assets-like-customer-lists-or-trade-secr"},{"question":"Can I use the working capital portion of my SBA loan to pay off the acquired business's existing trade payables?","url":"https://dealroom.so/sba-7a/questions/can-i-use-the-working-capital-portion-of-my-sba-loan-to-pay-off-the-acquired-business-s-ex"},{"question":"Can an SBA 7(a) working capital loan be used to pay off seller's outstanding trade payables?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-working-capital-loan-be-used-to-pay-off-seller-s-outstanding-trade-payables"},{"question":"What is the importance of a detailed business plan for an SBA 7(a) loan application, especially for new or acquiring businesses?","url":"https://dealroom.so/for-lenders/questions/what-is-the-importance-of-a-detailed-business-plan-for-an-sba-7-a-loan-application-especia"},{"question":"Are businesses with shared facilities or equipment considered affiliated for SBA size standards?","url":"https://dealroom.so/for-lenders/questions/are-businesses-with-shared-facilities-or-equipment-considered-affiliated-for-sba-size-stan"},{"question":"Are SBA 7(a) loans mainly for startup businesses, or also for existing ones?","url":"https://dealroom.so/sba-loans/basics/are-sba-7-a-loans-mainly-for-startup-businesses-or-also-for-existing-ones"}]},"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 — Trade or business","url":"https://dealroom.so/glossary/trade-or-business","source_type":"DealRoom Data"}}