Glossary · People and paperwork
LLC(Limited Liability Company)
In short
A business structure that combines the liability protection of a corporation with the pass-through taxation of a partnership or sole proprietorship. It's a common and flexible choice for buyers.
What it means in a deal
Many buyers form an LLC to acquire a business using an SBA loan. Like corporations, all owners with 20% or more equity in the acquiring LLC must personally guarantee the loan. This structure offers personal asset protection from business debts, but the SBA guaranty penetrates that for the loan.
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 LLC
- Does my business legal structure (like LLC or Sole Proprietorship) affect SBA 7(a) loan eligibility?
- Does my business need to be set up as an LLC or Corporation for an SBA 7(a) loan?
- Are there any specific business entity structures (e.g., LLC, S-Corp) required for an SBA 7(a) loan?
- What are the key considerations for a lender when approving a material change in the borrower's business entity structure (e.g., sole proprietorship to LLC) during servicing?
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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