Glossary · Reading the business
In short
A business where the owner is not actively involved in day-to-day operations or management. The SBA generally does not lend to passive businesses, as they require owner-operators.
The SBA 7(a) program is designed for active owner-operators. Businesses primarily generating income from passive activities like real estate rentals (unless operating a hotel/motel), investment properties, or lending are typically ineligible. Ensure the business you are acquiring requires and supports your active management.
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.
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