Glossary · Reading the business
In short
Passive income is money earned from an enterprise in which one is not actively involved, such as rental properties or investments. The SBA has rules against funding businesses that primarily generate passive income.
The SBA 7(a) loan program is designed to support operating businesses that create jobs and contribute to the economy, not for passive investments. If the target business generates a significant portion of its income passively, it might be ineligible for an SBA loan. Ensure the business you're buying is truly an active operating business.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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.
Free · No documents · Usually same-day