Glossary · People and paperwork
Trade or business
In short
This term refers to any activity carried on for livelihood or profit. For SBA purposes, it must be an operating, for-profit entity, not passive investments.
What it means in a deal
The SBA requires the loan proceeds to be used for a legitimate "trade or business" operation. This excludes passive investments or speculative activities. Ensure the business you're buying is actively engaged in commercial operations to meet this eligibility criterion.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Trade or business
- Can a 7(a) loan finance the purchase of intangible assets like customer lists or trade secrets in a business acquisition?
- Can I use the working capital portion of my SBA loan to pay off the acquired business's existing trade payables?
- Can an SBA 7(a) working capital loan be used to pay off seller's outstanding trade payables?
- What is the importance of a detailed business plan for an SBA 7(a) loan application, especially for new or acquiring businesses?
- Are businesses with shared facilities or equipment considered affiliated for SBA size standards?
- Are SBA 7(a) loans mainly for startup businesses, or also for existing ones?
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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