Glossary · People and paperwork
Related parties
In short
Related parties are individuals or entities with a close relationship to the borrower or seller, such as family members or affiliated businesses. The SBA scrutinizes these relationships for potential conflicts.
What it means in a deal
The SBA requires disclosure of all related parties involved in the loan transaction, including owners, management, and family members. Any transactions between related parties, like asset sales or loans, must be at arm's length and commercially reasonable to prevent fraud or unfair advantage. Be transparent to avoid delays.
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 Related parties
- What specific due diligence is required for a 7(a) loan involving a change of ownership between related parties?
- What specific additional due diligence is required for a 7(a) loan involving a change of ownership between related parties?
- What constitutes an acceptable 'arm's length transaction' for a change of ownership between related parties for a 7(a) loan?
- Why does the SBA combine the size of related businesses when checking loan eligibility?
- How does a lender prevent a guaranty denial related to undisclosed affiliations identified post-closing?
- When is an independent business valuation required for an SBA 7(a) acquisition, especially for related party transactions?
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.
Know what you'll need before you apply
Tell us about the deal and who's buying — we'll flag the guaranty, eligibility, and paperwork issues that slow SBA approval before they cost you time.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.