Federal regulation (highest authority)
13 CFR Part 120 — Business Loans
Published by Office of the Federal Register · Last checked by CapBench: 2026-06-13
What this source is
Title 13 of the Code of Federal Regulations, Part 120 is the federal regulation that governs SBA business-loan programs, including the 7(a) program. It sits above the SOP in the authority hierarchy — the SOP must conform to it. Part 120 defines eligible uses of proceeds, credit-elsewhere tests, size standards, lender obligations, change-of-ownership rules, and program structure at the statutory level.
Why it matters for buyers
When a rule claim traces back to a CFR citation, it carries federal regulatory weight. Lenders underwrite against Part 120 directly, and SBA reviews are measured against it. If a seller or buyer wants to understand why a deal structure is allowed or prohibited, Part 120 is the authority to check first — before the SOP and before any SBA summary page.
Topics this source controls
- Definitions (loan, borrower, lender, eligible passive company)
- Eligible and prohibited uses of 7(a) proceeds
- Credit-elsewhere test
- Size standards for business eligibility
- Lender obligations and delegated authority
- Change-of-ownership financing rules
- Interest rate caps and fee authority
- Personal guaranty requirements
- Collateral policy
- Loan servicing and liquidation standards
Related CapBench Q&A
These CapBench Q&A pages cite 13 CFR Part 120 directly.
Related CapBench tools
CapBench is not the SBA — the official source controls
This page summarizes 13 CFR Part 120 for informational purposes. CapBench is not affiliated with the SBA or any federal agency. The official source at www.ecfr.gov is the authoritative version. SBA rules change; always verify against the current official source before relying on any rule for a live deal. This is not legal, tax, or financial advice.
AI summary
This guide explains 13 CFR Part 120 — Business Loans — a federal regulation (highest authority) published by Office of the Federal Register — in plain English: what the document is, why it matters for business buyers, and the specific topics it controls (Definitions (loan, borrower, lender, eligible passive company), Eligible and prohibited uses of 7(a) proceeds, Credit-elsewhere test). CapBench organizes and summarizes it, but the official source always controls — verify against it before relying on any rule for a live deal. This is general information, not legal, tax, or financial advice, and CapBench is not a lender.
Source: CapBench SBA Intelligence, based on public SBA, lender, franchise, FDIC, and related records. CapBench is not a lender and does not guarantee financing.
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