SBA Loans for Business Acquisitions: What Every Buyer Needs to Know

Why SBA Matters for Business Buyers

The SBA 7(a) loan program is the primary financing vehicle for small business acquisitions in the United States. It allows buyers to purchase businesses with as little as 10% down, with terms up to 10 years.

Key Eligibility Requirements

• The buyer must have relevant experience or a credible plan
• The business must demonstrate consistent cash flow
• The deal must make sense from a debt service perspective (DSCR of 1.25x or better)
• The buyer must inject a minimum of 10% equity (sometimes more)

What Lenders Look For

SBA lenders evaluate the buyer, the business, and the deal structure. They want to see clean financials, reasonable add-backs, a viable transition plan, and a purchase price supported by the earnings.

Common Pitfalls

• Overpaying relative to cash flow
• Relying on projected (not historical) earnings
• Insufficient equity injection
• Poor quality of earnings documentation

Working With ExitGrowth Business Brokers

We help buyers understand SBA readiness before they submit an LOI, not after. This saves time, avoids surprises, and strengthens your position with lenders.