Glossary · People and paperwork
Sole Proprietorship
In short
A business owned and run by one individual where there is no legal distinction between the owner and the business itself. The owner is personally liable for all business debts.
What it means in a deal
If you're buying a sole proprietorship, you're usually acquiring its assets, not the entity itself, due to the inherent personal liability. Ensure a clear asset purchase agreement and understand the implications for transferring contracts, licenses, and customer relationships.
Related terms
Common questions about Sole Proprietorship
- 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?
- 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?
- 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.
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.