SBA Business Acquisition Loans

SBA Loans

SBA Business Acquisition Loans

Reviewed by our SBA lending team.

A wave of Baby Boomer business owners is heading into retirement, and many are motivated to sell. Nearly half of U.S. small-business owners are 55 or older, yet only about 54% have a succession plan in place – a gap analysts have dubbed the “Silver Tsunami.” Some estimates put the total value of businesses expected to change hands over the next decade above $10 trillion. (Forbes) For a buyer with relevant experience and some capital, that’s a real opportunity – and an SBA 7(a) loan is one of the most accessible ways to fund it.

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At a Glance

Loan Amount	$350,000 - $5 million ($10 million+ possible with a combined financing structure)
Down Payment	10% standard; 0% for qualifying same-industry expansion acquisitions
Terms	10 years, or 25 years if real estate is included
Financing We Offer	SBA only - we don't provide alternative/conventional acquisition financing
Ownership Requirement	Buyer must be an active manager - no absentee ownership

How We Evaluate the Deal

We lend on what the business’s tax returns report, not on projections or “potential.” Tax returns are a legal financial declaration to the government of what the business actually made – financials alone aren’t enough.

Specifically, we look at:

Two things buyers and brokers commonly get wrong:

Down Payment: 10% Standard, 0% for Expansion Acquisitions

Most business acquisitions require a 10% equity injection. There’s a notable exception: if you already own a profitable business and you’re acquiring another business in the same NAICS code, the SBA may treat it as a business expansion rather than a new acquisition – and qualifying deals can be financed with no down payment, using the equity and cash flow of your existing business to support the new one.

A NAICS code is the 6-digit number the government uses to classify a business by industry – you can find it on your business tax return, or look it up directly at census.gov/naics. If you’re looking to consolidate market share or eliminate a competitor in your own space, this is often the most efficient way to do it.

Active Ownership Required

To buy a business with an SBA loan, you need to plan on actively managing it. The SBA does not typically allow “absentee ownership” – this isn’t a passive investment vehicle.

Seller Notes & Seller Financing

Seller financing can strengthen a loan request – it shows the seller has skin in the game. But it comes with rules:

A seller note cannot count toward the required 10% equity injection unless the seller is a limited guarantor on the loan and agrees to full standby for the entire loan term - no principal or interest payments until the SBA loan is paid off.
A seller note can't be used to justify overpaying the business's real, current value. If the third-party appraisal comes back well below the loan amount plus seller note, the purchase price will need to be renegotiated - the SBA lends against appraised value, not the asking price.

Seller Notes & Seller Financing

Seller financing can strengthen a loan request – it shows the seller has skin in the game. But it comes with rules:

A seller note cannot count toward the required 10% equity injection unless the seller is a limited guarantor on the loan and agrees to full standby for the entire loan term - no principal or interest payments until the SBA loan is paid off.
A seller note can't be used to justify overpaying the business's real, current value. If the third-party appraisal comes back well below the loan amount plus seller note, the purchase price will need to be renegotiated - the SBA lends against appraised value, not the asking price.

Work With a Business Broker

We always recommend working with a business broker – whether you’re the buyer or the seller. A good broker represents your interests, understands the legal aspects of the deal, and helps you avoid costly contractual mistakes.

We work closely with brokers and built a VIP program specifically for them: front-of-line access, pre-qualification tools for their clients and listings, and educational resources – all designed to help brokers close more deals and put more dollars in their pockets.

Ready to Explore a Business Acquisition?

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FAQ's

Frequently Asked Questions

Can I buy a business with no money down?

Yes, in specific cases – if you already own a profitable business and are acquiring another in the same NAICS code, the deal may qualify as an expansion with no down payment required. Most other acquisitions require a 10% equity injection.

Can I use SDE (Seller's Discretionary Earnings) to qualify for a bigger loan?

Generally, no. We evaluate deals primarily on gross income, net income, and EBITDA from tax returns – SDE is rarely factored into the maximum loan amount.

Can a seller note cover my full down payment?

Not on its own. A seller note only counts toward equity if the seller is a limited guarantor and agrees to full standby (no payments) for the entire loan term.

Do I have to actively run the business I buy?

Yes. The SBA generally requires the buyer to be an active manager – absentee ownership isn’t typically allowed under this program.

Does your firm offer non-SBA financing for acquisitions?

No – we provide SBA financing for business acquisitions exclusively.

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