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. SBA-backed leverage on qualifying acquisitions, 10-year amortization on goodwill, and the senior-debt cost profile the SBA program was designed to deliver.
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
- Down payment
- 10% minimum; up to 5% may be a seller note on full standby
- Use of proceeds
- Business acquisition, partner buyout, working capital, owner-occupied real estate
- Rate
- Market-indexed, set on the term sheet after credit review. Adjusts quarterly.
- SBA guaranty fee
- Set per SBA's fee schedule in effect at close, financed into the loan
- Prepayment
- Per SBA-standard penalty schedule on 15+ year terms
- 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
- Personal guaranty
- Required of every 20%+ owner and their spouse where applicable
Prequal
to funded.
Five steps from written prequal to wire. Total elapsed time varies by file, SBA queue, third-party turnaround, and buyer document responsiveness.
- Step 01Prequalification
You submit the target, the LoI (or draft), buyer liquidity, and background. We return a written program match covering indicative terms and what underwriting will want, promptly.
- Step 02Full 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 03SBA 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 04Approval & commitment
SBA authorization issued. Commitment letter executed by buyer. Third-party reports (appraisal, business valuation, environmental when applicable) are ordered in parallel.
- Step 05Close & fund
Closing counsel drives documents, UCC filings, life insurance assignment, and the SBA authorization conditions. Wire funds the day conditions clear. Total elapsed time depends on the SBA queue, third-party turnaround, and buyer document responsiveness.
Right structure
for the 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 within the SBA 7(a) program range, where SBA 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 for SBA underwriting, third-party reports, and the standard SBA closing 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 filed tax returns, or financials we can't reconcile back to those returns
- ↗Close must happen on a very short timeline. SBA queues and third-party reports cannot be compressed.
- ↗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
- Market-indexed, per term sheet
- 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. Plan on a multi-month process 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 is set per SBA's fee schedule in effect at close and is financed into the loan, so you don't pay it out of pocket. Our advisory fee is disclosed upfront on the term sheet and paid at close out of loan proceeds.
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 under SOP 50 10 8, effective June 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. We'll return a written SBA 7(a) prequalification covering indicative structure and what underwriting will ask for next.