Glossary · The loan itself
In short
This is a business structure where participants primarily earn money by recruiting new members, rather than selling actual products or services. These businesses are ineligible for SBA loans.
The SBA explicitly prohibits lending to businesses primarily engaged in pyramidal distribution, multi-level marketing (MLM) where recruitment is the primary income driver, or any scheme deemed illegal. If the target business operates with an MLM component, you need to scrutinize its revenue model to ensure it's not a prohibited pyramidal system. Look for genuine product sales.
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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