Glossary · Reading the business
No Control Rule
In short
An SBA eligibility requirement stating that a business, to be eligible for an SBA loan, must not be controlled by another entity that itself is not eligible. This often applies to franchisors or other affiliates.
What it means in a deal
This rule is critical for franchise acquisitions. It ensures the borrower has actual control over the business, not an ineligible third party like a franchisor. The SBA will scrutinize your franchise agreement to confirm you have independent decision-making authority, especially regarding management and operations, to avoid any "negative control" by the franchisor or other affiliates.
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 No Control Rule
- How does the SBA define 'total control' rule to determine affiliation for size standards?
- How does the SBA define 'active ownership' for the 24-month rule?
- How does the 'franchise rule' affect affiliation calculations for SBA 7(a) eligibility?
- How does the 'not engaged in lending' rule apply to a loan applicant?
- What is the 24-month ownership rule for a $0-down SBA partner buyout?
- How does the SBA's "all available collateral" rule apply when business assets are limited?
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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