Glossary · Doing the deal
Stock Option Agreement
In short
A contract that gives an employee or investor the right, but not the obligation, to purchase a company's stock at a predetermined price within a certain timeframe.
What it means in a deal
If you're buying a business via a stock purchase, be aware of any existing stock option agreements. These can dilute your ownership percentage if exercised. In an asset purchase, this is less relevant as you're not acquiring the existing corporate entity directly. Ensure all outstanding options are identified and addressed in the purchase agreement.
Related terms
Common questions about Stock Option Agreement
- Does an unfunded stock option agreement trigger affiliation for SBA 7(a) size standard calculations?
- What is the difference between an asset and stock purchase in a buyout?
- What if the value of my stock portfolio (for equity injection) drops before closing?
- Can an SBA 7(a) loan be used to buy stock or passive investments?
- Does the SBA 7(a) loan program have an 'Express' option for quicker approvals?
- What documentation is required to verify equity injection funds sourced from a personal stock sale?
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.