Glossary · The loan itself
LOC Agreement(Line of Credit Agreement)
In short
This is a contract outlining the terms and conditions for a line of credit, allowing a business to draw funds up to a maximum amount, repay them, and redraw again. It's for working capital, not acquisition.
What it means in a deal
While an SBA 7(a) loan can include a working capital component, it's typically a term loan for the acquisition itself. An LOC Agreement is a separate instrument, usually for ongoing operational needs or seasonal fluctuations. Ensure you understand the distinction and how any working capital is structured.
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 LOC Agreement
- How does life insurance effectively fund a business buy-sell agreement?
- How does the purchase agreement structure affect an SBA partner buyout?
- How does an operating agreement impact an SBA partner buyout loan?
- What happens if the seller terminates the purchase agreement mid-process?
- What are the specific conditions for an acceptable full standby agreement?
- What if a franchise agreement contains provisions for indemnification that concern the SBA?
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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