---
kind: "section"
citation: "13 C.F.R. § 123.500"
title: "13"
number: "123.500"
heading: "Definitions."
url: "https://uscodex.org/cfr/13/123.500"
---

# §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)](/usc/10/101.md?p=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.

## Notes

### Amendments

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

### Source

Source: 66 FR 38530, July 25, 2001, unless otherwise noted.

### Authority

Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 636(d), 657n, 9009, and U.S. Const. art. VI, cl. 10.

### Source

Source: 61 FR 3304, Jan. 31, 1996, unless otherwise noted.

### Amendments

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