Change of Ownership SBA 7(a) Financing
Acquire a business or bring in new ownership with an SBA 7(a) loan. Finance complete acquisitions, partner buyouts, or family successions with competitive rates and flexible terms.
Types of Ownership Changes
SBA 7(a) loans support various business transition structures, making acquisitions and ownership changes accessible.
Full Acquisition
Purchase an entire existing business. The SBA 7(a) loan finances the acquisition price, which may include goodwill and working capital.
Partner Buyout
One partner buys out another partner's equity stake. Common in professional firms and multi-owner businesses.
Family Succession
Next generation takes over family business with seller financing and/or SBA 7(a) loan. Preserves business legacy while enabling smooth transition.
Franchise Purchase
Finance the acquisition of a franchise opportunity. SBA loans are popular for franchise purchases and can cover franchise fee, equipment, and initial inventory.
Loan Details & Terms
Flexible financing for business acquisitions and ownership transitions
Loan Amount
Up to $5MM
SBA 7(a) maximum
Goodwill Term
Up to 10 Years
For intangible assets
Real Estate Term
Up to 25 Years
If property included
Down Payment
Minimum 10%
SBA requirement
Acquisition-Specific Considerations
Business Valuation
The lender will require a professional business valuation to determine fair market value. This protects both parties and ensures the loan amount is appropriate for the business's earning potential.
Debt Service Coverage
The business should demonstrate sufficient cash flow — or projected cash flow — to support the debt payment. SBA 7(a) loans require a minimum 1.15x DSCR within 2 years of the note date. We evaluate each deal individually to ensure compliance with these requirements.
SBA 7(a) vs. Conventional Acquisition Financing
See why SBA loans are the preferred choice for business acquisitions
Lower Down Payment
SBA loans require just 10% down vs 20-30% for conventional lenders. Keep more capital for working capital and operations.
Longer Terms
Extended amortization periods (up to 25 years for real estate) mean lower monthly payments and better cash flow management.
Seller Financing Support
SBA loans work well alongside seller financing. The seller can hold part of the note, making acquisitions more affordable.
Competitive Rates
SBA lending rates are typically competitive with or better than conventional commercial loans due to SBA guarantee.
Established Business Track Record
You're financing a proven business with existing cash flow and customer base, not betting on a startup concept.
Flexible Use of Funds
SBA 7(a) loans can finance the purchase price including goodwill, real estate, equipment, and initial working capital.
Business Valuation Requirements
Understanding how acquisition prices are validated
Valuation Methods
- Income approach (EBITDA multiples)
- Market approach (comparable sales)
- Asset-based approach
- Hybrid valuation
Key Metrics
- Historical revenue trends
- EBITDA and net profit
- Customer retention rates
- Market position
Documentation
- 3 years financial statements
- Tax returns verified
- Customer/contract lists
- Professional valuation report
💡 Earnouts and Seller Financing
SBA loans can be structured with earn-out provisions where part of the purchase price is contingent on future performance. Additionally, the seller can hold a note (seller financing) alongside the SBA loan, reducing the amount you need to borrow and increasing deal appeal.
Documents You'll Need
Be prepared with these documents for your acquisition loan
📄 Buyer Documents
- 3 years of personal/business tax returns
- Personal Financial Statement (SBA 413)
- Resumes and business background
- Proof of funds for down payment
- Bank statements (3 months)
- Personal credit report
🏢 Target Business Documents
- Purchase agreement/LOI
- Professional business valuation
- 3 years tax returns & P&L statements
- Detailed income statements (monthly)
- Customer list and contract information
- Employee roster and payroll records
- Lease agreement or property details
- List of assets and liabilities
📋 Download SBA Form 413
The Personal Financial Statement (SBA Form 413) is required from all owners with 20% or more equity. Download our template below.
Download SBA Form 413Frequently Asked Questions
How is goodwill handled in an SBA 7(a) acquisition loan?
Goodwill (the premium paid above tangible asset value) can be included in the acquisition financing. The amount of goodwill financed depends on the business valuation and your down payment.
Can I assume seller financing as part of my SBA loan?
Yes. SBA loans work well with seller financing. The seller can hold a second note (often subordinated) while the SBA loan is in first position.
What happens if the target business has existing debt?
Existing debt is typically paid off as part of the acquisition. Your SBA loan finances the equity purchase price. Total debt service coverage includes both the SBA loan and any assumed liabilities.
How long does business valuation take?
A professional appraisal typically takes 2-4 weeks depending on business complexity. This is part of the 30-45 day typical approval timeline.
Do I need a non-compete agreement with the seller?
While not required by the SBA, non-competes are common and advised. Your lender may recommend one to protect the business value you're acquiring.
What if I want to acquire only part of a business?
Partial acquisitions and partnership buyouts are possible. The SBA will base the loan on the purchase price for your specific equity stake, plus your share of working capital needs.
Ready to Acquire Your Target Business?
Get pre-qualified for an acquisition loan and discover how much you can borrow. Apply now to start the process toward business ownership.