Glossary · People and paperwork
Sole proprietor
In short
A business structure where one individual owns and operates the business, personally responsible for all its debts and liabilities.
What it means in a deal
If you're buying a sole proprietorship, you're buying the individual's business assets, not a separate legal entity. This structure is simpler to set up but offers no personal liability protection. Ensure you understand how the asset purchase agreement handles existing liabilities, as you'll want to avoid inheriting the seller's personal business debts.
Related terms
Common questions about Sole proprietor
- Does my business need to have employees, or can I be a sole proprietor?
- What are the specific requirements for business continuity if the seller is the sole proprietor?
- Does my business legal structure (like LLC or Sole Proprietorship) affect SBA 7(a) loan eligibility?
- What are the key considerations for a lender when approving a material change in the borrower's business entity structure (e.g., sole proprietorship to LLC) during servicing?
- Can I use an SBA 7(a) loan to purchase business equipment as the sole purpose of the 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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