Glossary · People and paperwork
Restrictive clause
In short
A restrictive clause limits one party's actions within a contract. In your loan documents or lease, it could limit your business operations or your ability to sell assets.
What it means in a deal
Pay close attention to restrictive clauses in your lease agreement or loan documents. They might prohibit certain business activities, require lender approval for capital expenditures, or restrict your ability to take on additional debt. Understanding these limitations is crucial for future operational flexibility and growth.
Related terms
Common questions about Restrictive clause
- What if a proposed franchise agreement includes a clause restricting the borrower's operational control or management?
- Can a seller note on full standby have an acceleration clause if the business defaults on the SBA loan?
- What specific franchise agreement clauses are generally unacceptable to the SBA and could prevent financing?
- How does the SBA review franchise agreements for compliance if there are unusual clauses regarding termination or transfer?
- What specific types of clauses in a franchise agreement would constitute "undue control" by the franchisor, rendering it ineligible for 7(a) financing?
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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