Buying a Business with an SBA Loan

Buying a business that already has customers, staff and cash flow can be less risky than starting from zero, and lenders know it. The SBA 7(a) is the most common way small businesses are bought in the U.S. The rules tightened in October 2026, so here is how it works now.

The key rules (SOP 50 10 8.1, effective October 1, 2026)

• 10% equity injection minimum on a complete change of ownership. It cannot be reduced or waived.
• At least half of that 10% must come from “unlimited” sources, like your own cash. A seller note on full standby can cover the rest.
• Debt-service coverage of at least 1.25x: the business’s cash flow must cover all debt payments with a 25% cushion.
• Business acquisition debt amortized over a maximum of 10 years (longer if real estate is included).
• Quality of Earnings report required when the price is $3 million or more.
• All buyers and guarantors must be U.S. citizens or nationals.

What the loan can cover

• The purchase price, including goodwill.
• Working capital after closing.
• Real estate, if it is part of the deal.
• Closing costs.

Due diligence: what to review

Item	Why
3 years of tax returns and financials	Confirms the cash flow the seller claims
Bank statements	Shows whether deposits match reported sales
Lease	Must transfer to you with enough term
Customer concentration	One big customer is a risk
Staff and key employees	Will they stay?
Licenses and permits	Do they transfer?
Equipment condition	Avoid surprise repairs

Hire an accountant and an attorney who do small business acquisitions. It is money well spent.

How a typical deal looks

Price $500,000: buyer cash $50,000 (10%), or $25,000 cash plus a $25,000 seller note on full standby; SBA 7(a) loan for the balance plus working capital.

Find acquisition lenders

Lenders that do many 7(a) loans often have acquisition specialists. Search our lender finder by state and industry, and run the payment through our calculator using a 10-year term.

Frequently asked questions

Can an SBA loan pay for goodwill when buying a business?

Yes. A 7(a) loan can cover the purchase price including goodwill, plus working capital and closing costs.

Can a seller note count toward the down payment?

Partly. A seller note on full standby can cover up to half of the required 10% equity; the rest must come from sources like your own cash.

What cash-flow ratio does the SBA require for acquisitions?

Since October 2026, a debt-service coverage ratio of at least 1.25x for business acquisitions.