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    SBA Business Acquisition Loans: $350K to $5M, Up to $10M With Pari Passu

    CapitalAx arranges SBA 7(a) financing to buy a business, buy out a partner, or add a second location. We place loans from $350,000 to $5 million across 350+ lenders, and structure pari passu financing for acquisitions up to $10 million. Our average time to close is about 45 days. All industries are eligible for review.

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    Terms at a Glance

    A quick view of the acquisition financing parameters borrowers most often ask about.

    SBA business acquisition loan terms at a glance
    Loan size$350,000 to $5,000,000 on SBA 7(a). Up to $10,000,000 with a pari passu companion loan.
    Equity injection10% of total project costs for a first time acquisition.
    Seller noteA seller note on full standby can count for up to half of the required equity.
    TermUp to 10 years for a business acquisition without real estate. Purchases that include real estate may qualify for a blended term or up to 25 years under applicable SBA maturity rules.
    Debt service coverage1.25 for a first time acquisition or owner buyout. 1.15 for an existing business buying another in its industry.
    Time to closeAbout 45 days on average.
    IndustriesAll industries reviewed, including franchises, gas stations, restaurants, and service businesses.
    Deal typesFull acquisitions, partner buyouts, expansions, and purchases that include real estate.

    What Changed on October 1, 2026

    The SBA updated its acquisition rules on October 1, 2026. Buyers and sellers who structured a deal under the old rules should recheck it. The main changes:

    • Lenders now size the loan on the business's actual historical earnings. Projections no longer count toward debt service coverage on most acquisitions.
    • The coverage requirement for a first time acquisition rose to 1.25.
    • A purchase price of $3 million or more, not counting owner occupied real estate, requires an independent quality of earnings report.
    • Total debt on the purchase is capped at the appraised value of the business. If the price is above the valuation, the difference must come from buyer equity or a seller note on full standby.
    • Acquisitions must meet Appendix 15's underwriting requirements, including the applicable debt service coverage standards. SBA 7(a) Small and SBA Express remain available, subject to their program requirements.
    • Seller notes, other standby debt, and noncontrolling minority investor equity share one limit: together they can cover no more than half of the required equity.
    • A seller can stay on as a consultant for up to 24 months after closing.

    How Much Cash You Need

    On a first time acquisition, the SBA requires equity equal to 10% of total project costs. Total project costs include the purchase price, working capital, and closing costs.

    Example: on total project costs of $1,500,000, the required equity is $150,000. If the seller carries a note on full standby, that note can count for up to $75,000. The buyer brings the remaining $75,000 in cash.

    Full standby means the seller receives no principal or interest payments for the life of the SBA loan. Seller financing beyond that amount is still allowed on normal payment terms. It lowers the bank loan but does not reduce the cash you need.

    The valuation matters as much as the down payment. The lender orders an independent business valuation, and total debt cannot exceed it. If you agree to pay $1,400,000 for a business that is valued at $1,200,000, the $200,000 difference cannot be financed. You cover it with additional cash, or the seller carries it as a note on full standby for the life of the SBA loan.

    Deals We Structure

    • First time acquisitions: an individual or group buying 100% of an operating business.
    • Partner and owner buyouts: one owner buying out another. Lenders can reduce or waive the equity requirement on these when the transaction meets SBA conditions, including the business's net worth and working capital requirements.
    • Expansions: an existing business with at least two years under current ownership buying another business in the same industry.
    • Franchise resales and multi unit purchases.
    • Acquisitions with real estate: the business and its property in one loan, with a longer term available when the purchase meets SBA maturity requirements.
    • Acquisitions above $5 million: a pari passu companion loan sits alongside the SBA 7(a) loan for total financing up to $10 million.

    What Lenders Ask For

    • Signed letter of intent or purchase agreement
    • Three years of business tax returns and year to date financials for the business being purchased
    • Buyer's personal financial statement and three years of personal tax returns
    • Buyer's resume showing relevant management or industry experience
    • Source of the equity injection
    • Seller note terms, if any
    • A business valuation, which the lender orders
    • For purchases of $3 million or more, excluding owner occupied real estate, a quality of earnings report

    Timeline

    Our average time to close is about 45 days. A typical path:

    1. 01Deal review and lender match
    2. 02Lender term sheet
    3. 03Underwriting, valuation, and SBA approval
    4. 04Closing and funding

    A complete document package at the start is the biggest factor in closing on time.

    Recent Closing

    This published transaction illustrates a completed structure, not a commitment to reproduce its terms under current SBA rules.

    SBA 7(a) Business Acquisition: 5% Equity Injection

    CapitalAx structured a $1.3M SBA 7(a) loan with 5% equity injection using a standby seller note for a first time business acquisition.

    Loan Amount
    $1.3M
    Equity Injection
    5%
    Term
    25 Years
    Program
    SBA 7(a)
    Read the full case study

    Frequently Asked Questions

    A first time acquisition requires equity of 10% of total project costs. A seller note on full standby can cover up to half of that, so a buyer can close with as little as 5% in cash when the seller agrees.

    Total debt on the acquisition is capped at the appraised value of the business. The gap between the price and the valuation must be covered with buyer equity or a seller note on full standby. Many buyers renegotiate the price once the valuation comes in.

    The SBA 7(a) loan itself is capped at $5 million. For larger purchases, CapitalAx structures a pari passu companion loan alongside the 7(a) loan, for total financing up to $10 million.

    Yes. SBA 7(a) loans fund buyouts between existing owners. At least one original owner must stay in the business and personally guarantee the loan.

    Our average is about 45 days. Deals that need a quality of earnings report or include real estate can take longer.

    In most cases, no. Since October 1, 2026, lenders qualify acquisition loans on the business's historical earnings. There is one exception. When the purchase includes an owner occupied special purpose property that is already operating, such as a hotel, gas station, or car wash, and the appraised value fully collateralizes the loan, the lender may rely on projections. Coverage must be reached within two years of funding.

    CapitalAx reviews acquisitions in all industries that meet SBA eligibility rules.

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    SBA program rules are set by the U.S. Small Business Administration, and each lender applies its own credit standards. Terms shown are not a commitment to lend.