Glossary · People and paperwork
Legal Entity Structure
In short
This is how a business is legally organized (e.g., LLC, corporation, sole proprietorship). It impacts liability, taxes, and how the business can be bought or sold.
What it means in a deal
For an acquisition, you'll decide whether to continue the seller's structure or form a new one, typically an LLC for liability protection and tax flexibility. This decision affects your personal liability and future tax obligations. Consult with your attorney and tax advisor.
Related terms
Common questions about Legal Entity Structure
- What if the acquired business changes its legal entity structure after the SBA loan is approved?
- What happens if the acquired business changes its legal entity structure after the SBA loan is approved?
- 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?
- What happens if a major change in the acquired business's legal entity structure occurs after SBA loan approval?
- Are there specific requirements for the legal entity structure of the acquiring business 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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