How SMB NDAs Get in Their Own Way

Most legal teams assume a "strong" NDA includes every possible protective provision. Market data suggests otherwise.

After reviewing hundreds of SMB SaaS, services, and partnership NDAs, a different pattern emerges: many clauses considered "standard" are actually uncommon in real-world agreements. Instead, the contracts that move fastest tend to prioritize clarity, predictability, and alignment with market expectations over exhaustive legal protections.

Every additional provision introduces another potential negotiation point. That means more redlines, longer legal review, and slower sales cycles, often without materially improving confidentiality protections.

Understanding what the market actually accepts helps legal, procurement, and commercial teams distinguish between provisions that reduce risk and those that simply increase friction.

What clauses are common in SMB NDAs?

Most SMB NDAs omit several provisions that many organizations assume are standard, including residuals clauses, non-solicitation provisions, and indemnification obligations. Modern agreements increasingly favor simplicity because fewer negotiated terms generally lead to faster execution and fewer disputes. Contract Benchmarking helps organizations compare their templates against real market practices instead of relying on assumptions.

Why Market Standards Matter

Legal teams frequently negotiate from precedent rather than market reality. Templates evolve over years, collecting provisions from previous negotiations, outside counsel, and enterprise agreements that may not fit SMB transactions.

The result is a contract that becomes increasingly difficult to negotiate.

Contract Benchmarking helps teams determine whether a clause reflects current market practice or simply remains because "it's always been there." Instead of debating every provision, negotiators can focus on the terms that meaningfully affect business risk.

For procurement, sales, and legal operations teams, this translates into:

• Faster contract reviews
• Fewer negotiation cycles
• More predictable approvals
• Better customer experience
• Improved contract consistency

Key Takeaway

The fastest NDAs are not necessarily the shortest, they are the ones that align with market expectations. Eliminating unnecessary negotiation points often reduces friction more effectively than adding additional protections.

Common NDA Clauses That Create Negotiation Friction

Residuals Clauses Are the Exception, Not the Rule

Approximately 80% of SMB NDAs do not include a residuals clause. A residuals clause allows parties to retain general, non-confidential knowledge acquired during discussions. While these clauses appear more frequently in enterprise agreements, they remain uncommon across SMB contracts.

Including a residuals clause often leads to additional legal review because organizations may perceive it as weakening confidentiality protections or introducing ambiguity.

Contract Signal

A proposed residuals clause can signal that one party expects ongoing reuse of knowledge beyond the immediate business relationship. Whether that's appropriate depends on the transaction, but it frequently becomes a negotiation focal point.

Benchmarking Insight

If your organization has no operational need for residuals, omitting the clause generally aligns more closely with prevailing SMB market practice.

"Mutual" Doesn't Always Mean Balanced

Around 60% of reviewed NDAs are not fully mutual, even when labeled as such. Common differences include:

• Affiliate coverage
• Uneven confidentiality exceptions
• Different obligations for each party

These asymmetries often result from inherited templates rather than intentional business decisions.

Improving mutuality can strengthen trust between counterparties and reduce objections during negotiation, even if perfect symmetry is not yet the market norm.

Marking Requirements Continue to Slow Modern Agreements

Approximately 40% of SMB NDAs still require confidential information to be specifically marked for protection. These provisions largely originate from older contract templates.

Modern business communications happen through email, Slack, Teams, video meetings, collaborative documents, and cloud platforms. Requiring every disclosure to be formally marked creates unnecessary administrative overhead while increasing the possibility that genuinely confidential information loses protection because someone forgot a label.

Removing marking requirements often simplifies administration while improving consistency.

Non-Solicitation Provisions Rarely Belong in Early NDA Discussions

Approximately 70% of SMB NDAs omit non-solicitation clauses. These provisions restrict hiring or soliciting employees but are often unrelated to the initial exchange of confidential information.

Because they introduce employment-related restrictions, non-solicitation provisions frequently expand the scope of negotiations beyond confidentiality.

Unless workforce protection is central to the relationship, leaving these provisions out typically reflects prevailing SMB practice.

Indemnification Is Almost Never Included

Around 80% of SMB NDAs exclude indemnification provisions. Rather than requiring one party to compensate another for losses, most agreements rely on equitable remedies, such as injunctions, when confidentiality obligations are breached.

Indemnification provisions often trigger:

• Additional legal review
• Executive approvals
• Risk committee involvement
• Longer negotiation timelines

For many SMB transactions, these additional negotiations provide little practical benefit relative to the delay they introduce.

How These Clauses Compare

What These Patterns Reveal About Contract Intelligence

The data points to a broader trend.

Successful SMB contracting increasingly depends on understanding market behavior rather than relying solely on legacy templates.

Contract Intelligence allows organizations to identify which provisions consistently create delays, while Contract Benchmarking provides objective market comparisons that support better drafting decisions.

Instead of asking, "Can we include this clause?", leading legal teams ask:

• Is this clause common?
• Does it meaningfully reduce risk?
• Will it slow negotiations?
• Does the business actually need it?

Those questions lead to more efficient negotiations and more predictable deal outcomes.

Procurement Perspective

For procurement teams, contract language directly affects purchasing velocity.

Every non-standard provision increases review time, extends vendor negotiations, and delays implementation.

Organizations that align their NDAs with established market standards often experience:

• Faster supplier onboarding
• Fewer procurement bottlenecks
• Improved vendor relationships
• Greater consistency across commercial agreements

Benchmarking provides procurement teams with independent market data, making discussions less subjective and more evidence-based.

Key Takeaway

Market-standard contracts reduce negotiation because they remove unnecessary surprises. Benchmarking helps teams distinguish between meaningful protections and provisions that primarily create friction.

Frequently Asked Questions

Are residuals clauses standard in SMB NDAs?

No. The reviewed data shows that approximately 80% of SMB NDAs omit residuals clauses.

Should NDAs include non-solicitation provisions?

Not usually. Around 70% of SMB NDAs leave them out because they often introduce unnecessary negotiation without supporting the primary purpose of confidentiality agreements.

Why do some NDA clauses slow negotiations?

Additional provisions increase the number of issues that legal teams must review and negotiate. Clauses that differ from prevailing market standards often generate more redlines and longer approval cycles.

How does Contract Benchmarking help?

Contract Benchmarking compares your agreements against real market contracts, helping legal and procurement teams understand whether proposed terms align with common practice or introduce unnecessary negotiation friction.

Benchmark Before You Negotiate

The strongest NDA is not necessarily the one with the most clauses, it's the one that protects the business while reflecting how the market actually contracts.

The data shows that many commonly debated provisions are absent from most SMB NDAs. By understanding market standards before negotiations begin, legal and procurement teams can reduce friction, shorten review cycles, and make more confident drafting decisions.

TermScout helps organizations benchmark their contracts against thousands of real agreements, giving legal, procurement, and commercial teams objective insight into what is typical, negotiable, and likely to create friction. Rather than relying on assumptions or outdated templates, teams can negotiate with greater confidence using real market intelligence.

If your goal is to accelerate deal cycles while maintaining appropriate risk protections, benchmarking your agreements against actual market standards is a practical place to start.