13 CFR § 123.500 - Definitions.

---
identifier: "/us/cfr/t13/s123.500"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "13 CFR § 123.500 - Definitions."
title_number: 13
title_name: "Business Credit and Assistance"
section_number: "123.500"
section_name: "Definitions."
chapter_name: "SMALL BUSINESS ADMINISTRATION"
part_number: "123"
part_name: "DISASTER LOAN PROGRAM"
positive_law: false
currency: "2026-03-24"
last_updated: "2026-03-24"
format_version: "1.1.0"
generator: "[email protected]"
authority: "15 U.S.C. 632, 634(b)(6), 636(b), 636(d), 657n, 9009, and U.S. Const. art. VI, cl. 10."
regulatory_source: "61 FR 3304, Jan. 31, 1996, unless otherwise noted."
cfr_part: "123"
---


# 123.500 Definitions.

The following terms have the same meaning wherever they are used in this subpart:

(a) *Essential employee* is an individual (whether or not an owner of a small business) whose managerial or technical expertise is critical to the successful day-to-day operations of a small business.

(b) *Military reservist* is a member of a reserve component of the Armed Forces ordered to active service.

(c) *Active service* has the meaning given in 10 U.S.C. 101(d)(3):

(1) Service on active duty; or

(2) Full-time National Guard duty.

(d) *Principal owner* is a person or entity which owns 20 percent or more of the small business.

(e) *Substantial economic injury* means an economic harm to the small business such that it cannot:

(1) Meet its obligations as they mature,

(2) Pay its ordinary and necessary operating expenses, or

(3) Market, produce or provide a product or service ordinarily marketed, produced or provided by the business. Loss of anticipated profits or a drop in sales is not considered substantial economic injury for this purpose.

[66 FR 38530, July 25, 2001, as amended at 88 FR 24109, Apr. 19, 2023]