Glossary · Reading the business
In short
This SBA rule states that businesses primarily engaged in lending, such as banks or loan companies, are ineligible for 7(a) loans. It ensures SBA funding supports operating businesses, not financial intermediaries.
When evaluating a target business, verify its primary activities and NAICS code to ensure it doesn't fall under the 'not engaged in lending' exclusion. Businesses that derive more than 50% of their revenue from lending or passive investments are generally ineligible. This is a fundamental eligibility check you must make early.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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