Glossary · Reading the business
Active enterprise
In short
An active enterprise is a business engaged in ongoing commercial activity, providing goods or services. The SBA 7(a) loan program is exclusively for these types of businesses, not passive investments.
What it means in a deal
To qualify for a 7(a) loan, the business you're acquiring must clearly demonstrate it's an active enterprise with employees and regular operations. Businesses primarily generating passive income, like real estate holding companies, are generally ineligible. Your lender will verify the business's NAICS code and activities meet this requirement.
Official sources
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.
Related terms
Common questions about Active enterprise
- How does the SBA define 'active ownership' for the 24-month rule?
- Can life insurance be used to ensure fair distribution of assets among non-active heirs in a family business?
- Can an SBA 7(a) loan finance the buyout of a partner who will remain active in the business?
- Can a 7(a) loan finance a partial buyout where the seller retains a minority stake and remains active?
- What happens if a buyer for an SBA 7(a) loan has an active tax lien, even if on a payment plan?
Defined by CapBench 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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