Small Business Non-Disclosure Agreement: Do You Need One?

Have you ever been asked to keep an important secret? In short, that’s what a non-disclosure agreement is all about.

If you own a business – big or small – a non-disclosure agreement helps protect the secrets of your business.

Bank Term Loans Now • Pre-Qualify in Minutes

What is a 'Non-Disclosure Agreement?

Investopedia describes an NDA (also called a confidentiality agreement) as a legal contract between two or more parties that signifies a confidential relationship exists between those parties. The confidential relationship often refers to information that is to be shared between the parties but should not be made available to the general public. NDAs are also commonly referred to as a confidentiality agreement.

Types of NDAs

There are a variety of ways an NDA can be structured. Below are 3 common protections that NDAs can offer.

  • Sensitive information

This confidentiality agreement ensures that information can be shared for projects without the threat of the total loss of the information to a possible competitor.

  • Information levels

The courts would likely rule a blanket NDA unenforceable. Both parties should agree on which information is confidential and which is common knowledge.

  • Patents

Patent owners stipulate who may use the patent, and under what conditions it can be used. Without one in place, another party could claim that the patent is usable by anyone.

Who Should Sign an NDA?

Whitney Weiss, co-founder of Weiss Watch Company, requires every employee to sign an NDA. She says, “An NDA is important to our business because we are currently creating proprietary processes for machining and developing watch components.” NDAs might also need to be signed by vendors or potential investors in your business.

According to small business development organization SCORE, if your company’s private information somehow gets in danger of leaking out, the NDA can be used to ask the courts to put a stop to it. Or, if your trade secrets do wind up in the wrong hands, this document can be used to seek damages if you want to go that route.


Create a free Non-Disclosure Agreement on the Rocket Lawyer website. Of course, if your NDA is complex, it’s a smart idea to work with a legal professional.

Entrepreneur has put together an interesting article here: 5 Situations That Require a Non-Disclosure Agreement. Review the details to determine if your business qualifies.

Do you need extra funds for your small business? An SBA loan is the best bet for small businesses with low rates, long terms and low monthly payments. Visit SmartBiz today and discover in about five minutes if you’re qualified for an SBA loan.