Glossary · Doing the deal
Family member transaction
In short
This is when you buy a business from a close family member. The SBA has specific rules to ensure these deals are legitimate and not just a way to get cheap financing.
What it means in a deal
The SBA views family member transactions as potentially not "arms-length" and requires additional scrutiny. The seller cannot remain with the business in any capacity for at least 12 months post-closing to avoid affiliation concerns, and the transaction must be clearly structured as a true change of ownership.
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 Family member transaction
- What documentation is required to verify equity injection from a gift from a non-family member?
- Can money gifted from a family member be used for my SBA 7(a) equity injection?
- Can an SBA 7(a) loan be used to purchase a business from a family member?
- How should a lender verify funds gifted from a non-immediate family member for equity injection?
- Can a gift from a family member be used for my SBA 7(a) down payment?
- Can a loan from a non-owner family member count towards equity injection if on full standby?
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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