Glossary · People and paperwork
Key employees
In short
These are employees whose unique skills, knowledge, or relationships are critical to the business's success and continued operation. Losing them can significantly impact value.
What it means in a deal
Identify key employees early in due diligence. Understand their roles, compensation, and retention plans. You'll want to secure their commitment with new employment agreements or incentives to ensure a smooth transition and maintain business continuity post-acquisition. The SBA often requires life insurance on these individuals.
Official sources
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 Key employees
- If key employees resign during due diligence, could this kill the SBA loan approval?
- How are common officers or shared key employees between businesses evaluated for affiliation under SBA size standards?
- What specific scenarios involving shared directors, officers, or key employees constitute 'common management' triggering affiliation for SBA size determination?
- When is a lender required to conduct a criminal background check for non-owner managers or key employees of an applicant business?
- Does my business need to have employees, or can I be a sole proprietor?
- Does my business have to have employees to qualify for an SBA 7(a) loan?
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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