Highest leverage.
Lowest cost.
SBA-backed.
The SBA 7(a) loan is still the single best acquisition instrument for US buyers taking over an ecommerce, SaaS, or digital operator. Up to $5M at 90% leverage, a 10-year amortization on goodwill, and the lowest effective cost of capital your balance sheet will ever see.
Who
it's for.
SBA 7(a) underwriting is strict, but surprisingly legible once you know what the credit memo needs to say. These are the six gates every qualified buyer clears.
- 01US citizen
As of March 2025, every 20%+ owner, guarantor, and key employee must be a US citizen. Green card holders and LPRs no longer qualify under updated SBA rules. Foreign buyers route to Flex.
- 02Post-close DSCR of 1.25x or better
Trailing 12-month seller's discretionary earnings, adjusted for your operating plan, must cover new debt service at least 1.25 times.
- 0310% equity injection
At least half must be buyer cash. The other 5% can come from a seller note on full standby for the life of the SBA loan.
- 04Eligible operating business
Ecommerce, SaaS, marketplace, agency, or digital services operators with 3+ years of tax returns and a clean COGS + P&L trail.
- 05No federal delinquencies
No defaulted student loans, tax liens, or prior SBA charge-offs. Personal credit 680+ is the practical floor.
- 06Full-time operator intent
SBA 7(a) is for owner-operators. Passive holdco structures are not eligible. For that model, Flex or Capital Access is the right door.
Terms & structure.
The deal memo in one page. These are the terms we write into our standard commitment letter.
- Loan amount
- $750,000 to $5,000,000
- Term
- 10 yr goodwill / working capital · 25 yr when real estate is included
- Rate
- Prime + 2.25% to 2.75%, adjusts quarterly
- Down payment
- 10% minimum; up to 5% may be a seller note on full standby
- SBA guaranty
- 75% on loans over $150K, 85% at or below
- Collateral
- Required on all loans over $50K: all business assets plus available equity in personal real estate
- Prepayment
- 3% / 2% / 1% for the first three years on 15+ year terms only
- Personal guaranty
- Required of every 20%+ owner and their spouse where applicable
- SBA guaranty fee
- 2.77% to 3.75% of the guaranteed portion, financed into the loan
- Use of proceeds
- Business acquisition, partner buyout, working capital, owner-occupied real estate
Prequal
to funded.
Five steps, roughly fifteen weeks from written prequal to wire. Typical close on our last twelve 7(a) deals: 100+ days from signed LoI.
- Step 010124 hoursPrequalification
You submit the target, the LoI (or draft), buyer liquidity, and background. We return a written program match covering terms, rate range, and what underwriting will want, inside one business day.
- Step 0202Weeks 1–4Full underwriting
Buyer package, three years of target financials and tax returns, QoE (we coordinate), and a lender-ready deck. Our team writes the credit memo. The SBA lender doesn't start from scratch.
- Step 0303Weeks 5–7SBA submission
Credit committee approval, Form 1919s and 413s executed, SBA Form 1920 and Etran submission by our preferred lender partner. We manage every SBA-side question in real time.
- Step 0404Weeks 8–11Approval & commitment
SBA authorization issued. Commitment letter executed by buyer. Third-party reports (appraisal, business valuation, environmental when applicable) are ordered in parallel.
- Step 0505Weeks 12–15Close & fund
Closing counsel drives documents, UCC filings, life insurance assignment, and the SBA authorization conditions. Wire funds the day conditions clear. Typical close from signed LoI: 100+ days.
Right tool,
right deal.
We only place SBA when it is the best instrument for the deal. Otherwise we move you to Flex without restarting the clock.
Run this deal through SBA.
- ✓Target is a US-domiciled operating business with 3+ years of filed tax returns
- ✓Buyer is a US citizen intending to run the business full-time (LPRs/green card holders ineligible as of March 2025)
- ✓Purchase price between $750K and $5.5M, where 90% leverage actually moves the deal
- ✓Acceptable personal credit (680+) and available liquidity at roughly 10 to 15% of purchase price
- ✓DSCR clears 1.25x on conservative post-close projections
- ✓Timeline allows 100+ days to close, which is the honest SBA window
SBA is not the right tool.
- →Foreign buyer, green card holder, EB-5 applicant, or non-resident sponsor. SBA cannot lend as of March 2025.
- →Passive holdco or search fund structure with no operating W-2. Flex was built for this.
- →Purchase price above $5M on a single transaction. We layer Flex or Capital Access.
- →Target has fewer than three years of tax returns or a qualified audit opinion
- →Close must happen in under 45 days. SBA cannot hit that timeline.
- →Buyer wants to avoid a personal guaranty. SBA always requires it; Flex often does not.
A recent close.
- Target
- 8-year Shopify DTC brand · home goods
- TTM revenue
- $6.4M
- TTM SDE
- $1.18M
- Purchase price
- $3.20M · 2.7x SDE
- Buyer equity
- $320K cash · 10%
- SBA 7(a) loan
- $2.88M · 25-yr amortization
- Rate
- Prime + 2.5%
- DSCR at close
- 1.42x
- Signed LoI to wire
- 104 days
The buyer was a thirty-four-year-old ecommerce operator who had run a seven-figure Amazon brand for the previous decade. He had $420K in liquid cash, an 782 FICO, and a signed LoI on a Shopify DTC home-goods brand his wife had been a customer of for years. The seller wanted out cleanly, was willing to stay on for a twelve-month transition, and did not need a rollover equity piece.
“We had one other lender quoting, faster to close, but 250 basis points higher and a five-year balloon. The SBA stack cost me six weeks and saved me roughly $340,000 in interest over the hold. That is the whole deal.”
We structured the down payment as $320K buyer cash, eliminating the need for a seller standby note and keeping the closing table simple. Third-party business valuation came in at $3.25M, supporting the price. QoE (coordinated through our vetted provider) was clean on SDE and flagged one working capital normalization we built into the model. The SBA authorization issued on day 78. Wire cleared on day 104.
The seven
questions every buyer asks.
Pulled from the last hundred discovery calls, expanded where the honest answer is more than one sentence.
Q.01Why does SBA take longer than private credit?+
Every 7(a) loan routes through SBA Etran for authorization, plus third-party reports. Business valuation is mandatory on acquisitions over $250K, and an appraisal is required whenever real estate is included. Honest close window is 100+ days from signed LoI. If your timeline is tighter, Flex is the answer.
Q.02Can a foreign buyer use SBA 7(a)?+
No. As of March 2025, every 20%+ owner, guarantor, and key employee must be a US citizen — lawful permanent residents and green card holders no longer qualify under updated SBA rules. If you're on an E-2, H-1B, waiting on a green card, or already hold a green card, we route to Flex, which has funded dozens of foreign-buyer acquisitions in the $750K to $10M range.
Q.03What exactly can the 10% equity injection be?+
Minimum 5% must be cash the buyer has held for at least 60 days, sourced and seasoned. Up to 5% of the purchase price can be a seller note on full standby (no principal or interest payments for the life of the SBA loan). Gift funds count if properly documented. Home equity lines and retirement rollovers (ROBS) are allowed with structuring.
Q.04How do the fees actually work?+
The SBA guaranty fee runs 2.77% to 3.75% of the guaranteed portion and is financed into the loan. You don't pay it out of pocket. Our advisory fee is paid at close out of loan proceeds, disclosed upfront on the term sheet, with no retainer to begin.
Q.05Can the seller stay on after close?+
Yes, and we recommend it. SBA permits the seller to remain as a W-2 employee or 1099 consultant for up to 12 months post-close for transition. They cannot retain equity beyond a standby seller note, and they cannot serve as an officer or director after the 12-month window.
Q.06Is a personal guaranty really required?+
Yes. Every owner of 20% or more, and their spouse in community-property states, signs a full personal guaranty. This is non-negotiable under SBA policy. Buyers who cannot or will not personally guaranty should look at the Flex program, where a corporate-only guaranty is often available.
Q.07What does my personal real estate have to do with the loan?+
SBA now requires collateral on all loans over $50K (lowered from $500K in April 2025). If business assets don't fully cover the loan, any real estate you or a guarantor owns with 25%+ equity must be pledged up to the shortfall. This is a lien, not a transfer — you keep the property, and it releases when the loan is paid off or refinanced.
Ready to run your
numbers?
Send us the target and a rough LoI. Within 24 hours you'll have a written SBA 7(a) prequalification: rate range, structure, close window, and what underwriting will ask for next.