Glossary · The loan itself
Multi-Level Marketing Company(MLM)
In short
A business model where participants sell products and also earn commissions from sales made by people they recruit. While often legal, the SBA has specific rules for financing them.
What it means in a deal
The SBA can finance an MLM if its primary revenue comes from product sales to end-users, not just recruitment. Lenders will examine the compensation plan to ensure it's not a pyramid scheme in disguise. Understand the SBA's 'not engaged in lending' rule and 'ineligible businesses rule' when considering an MLM.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Multi-Level Marketing Company
- Can a business engaged in multi-level marketing (MLM) be eligible for a 7(a) loan?
- How does the SBA evaluate the eligibility of an applicant business involved in multi-level marketing or pyramid sales schemes?
- Is it necessary to obtain separate life insurance policies for each owner in a multi-owner business?
- What level of environmental due diligence is required for leasehold improvements only, without real estate acquisition?
- Are marketing and advertising expenses allowed uses for 7(a) loan funds?
- What level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?
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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