How much do I need to put down to buy a business with an SBA loan?

The SBA requires equity from the buyer and lenders commonly ask for around a tenth of the price or more, some of which can be a seller note the lender approves. Consult a lender for the figure that applies to you and the business.

Does the seller have to agree to an SBA buyer?

The seller agrees to the price and terms, including the timeline and any seller note. Sellers generally welcome SBA buyers because the lender's valuation confirms the price, but they will want to see that you are prequalified before they accept.

Can I use an SBA loan to buy a franchise?

Yes, for franchisors on the SBA's approved list. New units and resales both qualify, and the franchisor's approval of you as a franchisee is a condition of the purchase.

Can I Buy an Existing Business With an SBA Loan?

Yes. SBA-guaranteed loans, chiefly the 7(a) program, are the most common way small businesses in Florida change hands. The lender makes the loan and the government guarantees part of it, which lets banks finance a purchase they would not finance alone. The business, not just you, has to qualify: its tax returns have to show it can pay the loan.

Reviewed by Tyson E. Sam, Founder and Broker of Record, BreakThru Realty, Florida License 3565210

What the Lender Looks At

Three things: the business, the buyer and the deal. The business must show, on its tax returns, enough cash flow to cover the loan payments with a margin after the new owner is paid. The buyer needs relevant experience or a credible plan, decent credit and the down payment. The deal must hold up: a lender-ordered business valuation has to support the price, and the lease must run, with options, for at least the term of the loan in most cases. Consult a lender early; prequalifying the buyer and the business before an offer saves months.

The Down Payment and the Seller Note

SBA rules require the buyer to put equity into the purchase, and many lenders ask for a tenth of the price or more, which can come partly from a seller note that stands behind the bank loan on terms the lender approves. A seller willing to carry part of the price makes the loan easier to approve and signals confidence in the business, which is why "seller financing available" matters on a listing. The lender sets what counts; your accountant confirms what you can afford.

What Can Be Financed

The business purchase itself, working capital, equipment, and real estate when the business owns its building, which can lengthen the repayment term. Franchise purchases and resales qualify when the franchisor is approved. Loan terms for a business purchase without real estate commonly run ten years, which is why the lease term matters so much. See the guide on buying a business with the real estate for how the two are financed together.

The Timeline

From accepted offer to closing, an SBA-financed purchase commonly takes sixty to ninety days: the lender orders the valuation, underwrites you and the business, the landlord consents to the lease assignment, licences are applied for and the closing agent prepares the documents. Build that into the letter of intent, keep the seller informed, and have your financial documents ready before you make the offer. Delays almost always come from missing paperwork, not from the SBA.

Businesses That Fit an SBA Purchase

Established businesses with clean tax returns, at least two or three years of history, a transferable lease and earnings that comfortably cover the debt. Businesses whose profit lives in cash that never reached the tax return do not finance, however good the owner says they are. The businesses-for-sale pages on this site show which listings offer seller financing and which report their cash flow, both of which make an SBA purchase more likely to close.

Talk to a Business Broker

A licensed BreakThru Realty business broker can read the lease, the financials and the listing with you before you make an offer. Call or text (786) 914-1017.

Questions Buyers Ask

How much do I need to put down to buy a business with an SBA loan?: The SBA requires equity from the buyer and lenders commonly ask for around a tenth of the price or more, some of which can be a seller note the lender approves. Consult a lender for the figure that applies to you and the business.
Does the seller have to agree to an SBA buyer?: The seller agrees to the price and terms, including the timeline and any seller note. Sellers generally welcome SBA buyers because the lender's valuation confirms the price, but they will want to see that you are prequalified before they accept.
Can I use an SBA loan to buy a franchise?: Yes, for franchisors on the SBA's approved list. New units and resales both qualify, and the franchisor's approval of you as a franchisee is a condition of the purchase.