Glossary · People and paperwork
Legal entity
In short
A business structure recognized by law (e.g., LLC, Corporation, Partnership) that can enter into contracts, own assets, and incur liabilities independently. You'll form one to acquire the business.
What it means in a deal
You will typically acquire a business using a new legal entity (an LLC or Corporation) to protect your personal assets from business liabilities. This entity will be the borrower on the SBA loan. Consult with your attorney to choose the best structure for your situation.
Related terms
Common questions about Legal entity
- What if the acquired business changes its legal entity structure after the SBA loan is approved?
- Does my business have to be a specific legal entity type for an SBA 7(a) loan?
- What happens if the acquired business changes its legal entity structure after the SBA loan is approved?
- If the business has a separate legal entity owning its key intellectual property, how does this affect collateral?
- Can a lender approve a change in a borrower's business legal entity structure without prior SBA approval?
- Can a lender approve a change in a 7(a) borrower's legal entity structure without prior SBA approval?
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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