Glossary · The loan itself
EPC/OC structure
In short
This refers to a common setup where an Eligible Passive Company (EPC) owns the real estate and leases it to an Operating Company (OC), which runs the business and is the SBA loan borrower. It separates real estate ownership from business operations.
What it means in a deal
The EPC/OC structure is often used when an SBA loan finances both a business acquisition and the real estate it operates from. The OC is the actual borrower, and the EPC often provides the real estate as collateral. Understand that both entities will be linked by lease agreements and potentially cross-guarantees, requiring careful review.
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 EPC/OC structure
- How does the purchase agreement structure affect an SBA partner buyout?
- Can I change my business structure after getting an SBA 7(a) loan?
- How does seller financing structure impact the required equity injection for a business acquisition?
- Are there specific requirements for the business entity structure for an SBA 7(a) loan?
- Does my business legal structure (like LLC or Sole Proprietorship) affect SBA 7(a) loan eligibility?
- Can an earn-out provision in a purchase agreement affect 7(a) loan eligibility or structure?
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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