Glossary · Doing the deal
Non-Compete Payment
In short
The portion of the purchase price specifically allocated to the seller for agreeing not to compete. This payment is typically financed as part of your SBA 7(a) loan.
What it means in a deal
When structuring the deal, a specific amount is often assigned to the non-compete agreement. This payment is part of the total project costs and can be financed through the SBA loan, up to a maximum of $500,000. It's a key component for tax purposes and lender approval.
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 Non-Compete Payment
- For a partner buyout, what if the departing partner also has a non-compete payment?
- Does the departing partner need to sign a non-compete agreement for an SBA-financed buyout?
- What is the importance of a non-compete agreement from the seller in an SBA 7(a) acquisition?
- Can I include the cost of a non-compete agreement with the seller in my SBA 7(a) loan?
- Can I use gifted funds from a non-relative for my down payment?
- Can gift funds from a non-family investor count towards my down payment?
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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