Glossary · Reading the business
Profit Motive
In short
This refers to the primary intention of a business to generate profit. The IRS and SBA require businesses to demonstrate a genuine profit motive to qualify for certain tax deductions and loan programs.
What it means in a deal
The SBA requires the acquired business to operate with a profit motive, meaning it can't be a hobby or a non-profit. Lenders assess the business's historical financial performance and your business plan to confirm its viability and intent to generate earnings. This is fundamental to proving the business's ability to repay the SBA loan.
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 Profit Motive
- Can a non-profit organization with a for-profit subsidiary be eligible for a 7(a) loan?
- Can a non-profit organization receive an SBA 7(a) loan?
- Does my business need to be a for-profit company to qualify?
- Can a non-profit organization qualify for an SBA 7(a) loan?
- Can a non-profit organization receive an SBA 7(a) loan for their activities?
- Can a business that is not for profit receive an SBA 7(a) loan?
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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