Glossary · People and paperwork
Shell Company
In short
A company that exists legally but has no significant assets, operations, or employees. It's often used for financial maneuvering or to obscure ownership.
What it means in a deal
The SBA has strict rules against using 7(a) loans for businesses that are merely shell companies. Your target business must be an operating concern with demonstrable assets, employees, and revenue-generating activities to qualify. Lenders will verify this during underwriting.
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 Shell Company
- Are business life insurance premiums generally tax deductible for the company?
- Can an SBA 7(a) loan help me acquire another company?
- What distinguishes a company redemption from a cross-purchase buyout for SBA?
- Does my business need to be a for-profit company to qualify?
- Can the company itself redeem the departing partner's shares with an SBA loan?
- What happens if my business real estate is owned separately from my operating company?
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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