Ben's answer

SBA Loans

SBA Loan to Buy a Business: Down Payment and Rules

Yes. SBA 7(a) loans can finance buying an existing business. Under SBA's current rules (SOP 50 10 8.1, effective October 1, 2026), most first-time buyers need a down payment of at least 10% of total project cost, and a seller note on full standby can cover up to half of it.

10%Under SBA's current lending rules, SOP 50 10 8.1 (effective October 1, 2026), a buyer who is acquiring a business they don't already own needs an equity injection of at least 10% of the total project cost, and SBA says that minimum "cannot be reduced or eliminated.
$5 millionSBA's 7(a) page says the maximum 7(a) loan is $5 million.
$350,000For deals where the business purchase price is $350,000 or less, the lender may do its own valuation.
$3 millionA Quality of Earnings report for Initial Acquisitions and Business Expansions with a purchase price of $3 million or more.

Yes. SBA lists "changes of ownership (complete or partial)" as an eligible use of 7(a) loans. Under SBA's current lending rules, SOP 50 10 8.1 (effective October 1, 2026), a buyer who is acquiring a business they don't already own needs an equity injection of at least 10% of the total project cost, and SBA says that minimum "cannot be reduced or eliminated."

Last checked: October 27, 2026. This page is general information, not tax, legal, or financial advice.

The short version

Loan program	SBA 7(a). SBA's 7(a) page says the maximum 7(a) loan is $5 million.
Down payment	at least 10% of total project cost for an outside buyer (SBA calls this an "Initial Acquisition").
Seller financing	a seller note can count toward the down payment only if it's on full standby, with no principal or interest payments for the life of the SBA loan, and limited sources like this can cover no more than half of the required injection.
Repayment	the business portion of the loan can't amortize over more than 10 years. Real estate bought in the same deal can go longer, up to 25 years for that portion.

These are SBA minimums. Your lender can ask for more.

Which rules apply to your purchase

SOP 50 10 8.1 sorts every change of ownership into one of four types:

Initial Acquisition	a new majority or largest owner who wasn't already an owner, or who has worked at the business for fewer than 24 months. This is the default category and covers most people buying a business.
Business Expansion	an existing small business that has operated at least two full fiscal years under current ownership buys all of another business in the same four-digit NAICS industry group.
Owner Buyout	current owners or long-time employees (at least 24 months) buy out other owners, or a partial change where at least one original owner stays.
ESOP and Cooperative	an employee stock ownership plan or co-op buys a controlling interest in the business.

SBA's notice on the new SOP says it applies to applications issued an SBA loan number on or after October 1, 2026. Applications submitted through September 30, 2026 stay under the prior version, SOP 50 10 8.0.

Who qualifies

How much you need to put down

For an Initial Acquisition, the minimum equity injection is 10% of the total project cost, meaning all costs needed to become operational, regardless of the source of funds, except lines of credit and 504 loans.
SBA says that requirement can't be reduced or eliminated.
Business Expansions and Owner Buyouts also start at 10%, but the lender may reduce or eliminate it if the business has enough liquidity and working capital after the deal and didn't have a negative net worth at its last fiscal year-end.
For Owner Buyouts, the 10% is based on the purchase price in the purchase agreement.
Made up with equity.
On top of the minimum.
The business must meet SBA's general 7(a) rules: an operating, for-profit business located in the U.S., small under SBA size standards, not an ineligible business type, and creditworthy with a reasonable ability to repay.
The small business must be the borrower or a co-borrower. SBA says a 7(a) loan can't be made solely to an individual.
For an Initial Acquisition, historical cash flow generally has to cover debt payments at least 1.25 times over.
The seller in an Initial Acquisition or Business Expansion generally can't stay on as an owner, officer or employee, but can consult for up to 24 months.

What counts as your down payment

The SOP splits sources into two groups.

Unlimited sources:

Cash that isn't borrowed, including gifts.
A personal loan to a guarantor, if it's repaid from something other than the business's cash flow (your salary from the business doesn't count).
Grants with no repayment or clawback provisions during the loan term.
Eligible prepaid expenses the lender verifies with paid invoices, canceled checks or bank statements.

Limited sources, which together can make up no more than half of the required injection:

Seller debt that is subordinated to the lender and on full standby (no payments of principal or interest for the term of the 7(a) loan).
Other debt on full standby.
Non-controlling minority equity investments, from investors who hold a small minority stake and exert no control.

So on a deal where your required injection is 10%, at least half of it has to come from an unlimited source, which for most buyers means their own cash. The cost of the business valuation and other due diligence reports can count toward your injection.

What the lender will check

An independent business valuation, requested by and prepared for the lender. For deals where the business purchase price is $350,000 or less, the lender may do its own valuation.
A Quality of Earnings report for Initial Acquisitions and Business Expansions with a purchase price of $3 million or more.
The seller's tax transcripts, a site visit, and the full purchase agreement.

Total debt for the purchase, including any seller note that isn't on full standby, is capped at the business valuation and has to be supported by the business's cash flow.

How to get it

How to get started

Pick the right transaction type with your lender, since it sets your down payment and cash-flow test.
Line up your injection early, and keep at least half of it in cash or another unlimited source.
If the seller will carry a note, ask whether they'll accept full standby for the life of the SBA loan.
Find SBA lenders that do acquisition loans through SBA's Lender Match , or get free help from an SBDC or SCORE through SBA's resource partners.
For the general application process, see our guide on how to get an SBA loan.

Programs that may match

Look beyond the 7(a)

SBA 504 loansIf the deal includes owner-occupied real estate, the real estate can be financed separately, including with a 504 loan, which follows 504 down payment rules. See our SBA 504 down payment guide.SBA ExpressSBA Express loans can also fund changes of ownership under the same Appendix 15 rules. See SBA Express loans.504 vs. 7(a)Compare the two in our SBA 504 vs. 7(a) guide.Not sure which programs apply to you? FundPlenty's free match checks your business against 1,700+ federal and state grants, tax credits, incentives and SBA loans in 6 quick questions at fundplenty.com.

FAQ

Can you use an SBA loan to buy an existing business?

Yes. SBA lists changes of ownership, complete or partial, as an eligible use of 7(a) loans, up to SBA's $5 million 7(a) maximum.

What is the minimum down payment for an SBA business acquisition loan?

For a buyer who isn't already an owner (an Initial Acquisition), at least 10% of total project cost under SOP 50 10 8.1, and SBA says it can't be reduced or eliminated.

Can a seller note cover the down payment?

Partly. A seller note counts only if it's subordinated and on full standby, with no principal or interest payments for the life of the SBA loan, and limited sources like this can cover no more than half of the required injection.

How long can an SBA acquisition loan run?

The change-of-ownership portion can't amortize over more than 10 years. If real estate is part of the deal, that portion can go up to 25 years on a blended basis.

Can the seller stay on after the sale?

In an Initial Acquisition or Business Expansion, the seller generally can't remain as an owner, officer or employee, but can consult for up to 24 months. Sellers can stay in partial buyouts.