Glossary · The loan itself
In short
An illegal business model where participants profit primarily from recruiting new members, not from selling legitimate products or services. The SBA will not finance these businesses.
The SBA strictly prohibits lending to businesses engaged in pyramid schemes. This falls under the ineligible businesses rule. Lenders will scrutinize the business model to ensure its revenue comes from genuine sales, not just recruitment fees, to protect against fraud and ensure legitimate use of federal funds.
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.
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