{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-i-include-the-cost-of-a-non-compete-agreement-with-the-seller-in-my-sba-7-a-loan","api_url":"https://dealroom.so/api/public/questions/can-i-include-the-cost-of-a-non-compete-agreement-with-the-seller-in-my-sba-7-a-loan","question":"Can I include the cost of a non-compete agreement with the seller in my SBA 7(a) loan?","topic":"Use of proceeds","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, the cost of a non-compete agreement with the seller can be an eligible use of SBA 7(a) loan proceeds as part of a business acquisition.","rule":"For business acquisitions, the SBA considers reasonable and customary costs associated with the purchase, including the value attributed to a non-compete agreement, as eligible uses of loan proceeds. This is viewed as essential to protect the value of the acquired business. The value assigned must be commercially reasonable.","example":"You are buying a dental practice for $900,000. The purchase agreement includes a $50,000 non-compete clause with the seller. This $50,000 can be financed as part of the total SBA 7(a) acquisition loan, ensuring the seller doesn't open a competing practice nearby.","what_lenders_check":"Lenders verify that the non-compete agreement is legally sound, commercially reasonable, and essential for the buyer to retain customer base and value of the acquired business. They ensure the allocated amount is justified.","required_facts":["Non-compete agreement","Business acquisition cost","Seller agreement","Commercially reasonable"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"Can an SBA 7(a) loan be used to buy a new franchise business?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-buy-a-new-franchise-business"},{"question":"Can an SBA 7(a) loan be used for business acquisition, like buying an existing company?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-for-business-acquisition-like-buying-an-existing-company"},{"question":"What conditions must be met to use an SBA 7(a) loan for refinancing existing business debt?","url":"https://dealroom.so/sba-7a/questions/what-conditions-must-be-met-to-use-an-sba-7-a-loan-for-refinancing-existing-business-debt"},{"question":"Can I use an SBA 7(a) loan to buy the land for my business?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-buy-the-land-for-my-business"},{"question":"Can an SBA 7(a) loan help fund the purchase of heavy machinery or specialized equipment?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-help-fund-the-purchase-of-heavy-machinery-or-specialized-equipment"},{"question":"Can I use an SBA 7(a) loan to buy equipment for an existing business I already own?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-buy-equipment-for-an-existing-business-i-already-own"}],"related_terms":[{"term":"Non-Compete Agreement","url":"https://dealroom.so/glossary/non-compete-agreement"},{"term":"Non-compete","url":"https://dealroom.so/glossary/non-compete"},{"term":"Non-Compete Payment","url":"https://dealroom.so/glossary/non-compete-payment"},{"term":"Breach of the Loan Agreement","url":"https://dealroom.so/glossary/breach-of-the-loan-agreement"},{"term":"Seller Consulting Agreement","url":"https://dealroom.so/glossary/seller-consulting-agreement"},{"term":"Seller standby agreement","url":"https://dealroom.so/glossary/seller-standby-agreement"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-i-include-the-cost-of-a-non-compete-agreement-with-the-seller-in-my-sba-7-a-loan","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}