Glossary · Doing the deal
Related-Party Transaction
In short
A business deal between two parties who have a relationship that could potentially influence the terms of the transaction, such as family members, affiliated businesses, or common ownership.
What it means in a deal
SBA guidelines generally prohibit lending for related-party transactions unless very strict conditions are met, as they do not typically represent fair market value. If you are attempting to buy a business from a family member or an entity you already control, expect significant scrutiny or an outright denial from SBA lenders. This rule aims to prevent fraud and ensure market-based pricing.
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-Party Transaction
- When is an independent business valuation required for an SBA 7(a) acquisition, especially for related party transactions?
- 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?
- Who actually lends the money in an SBA 7(a) loan transaction?
- Can a third-party loan, not from the seller, count towards the minimum equity injection?
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.
Line up financing while you're under LOI
Tell us the business, the price, and your timeline — we'll match you with lenders who close deals like yours and flag anything that stalls the process.
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.