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.
- US 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. If you're a green card holder, Flex and Capital Access are the right doors.
- Post-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.
- 10% 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.
- Eligible operating business
Ecommerce, SaaS, marketplace, agency, or digital services operators with 3+ years of tax returns and a clean COGS + P&L trail.
- No federal delinquencies
No defaulted student loans, tax liens, or prior SBA charge-offs. Personal credit 680+ is the practical floor.
- Full-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.
- 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.
- Prequalification
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.
- Full 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.
- SBA 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.
- Approval & commitment
SBA authorization issued. Commitment letter executed by buyer. Third-party reports (appraisal, business valuation, environmental when applicable) are ordered in parallel.
- Close & 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.
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.
- ↗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, a 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.
What is an SBA 7(a) loan?+
An SBA-backed loan typically used to finance business acquisitions, offering higher leverage, less stringent underwriting, and less collateral requirements than conventional financing options.
How much can I borrow?+
Loan amounts are available up to $5 million under the SBA 7(a) program. Borrowers can have multiple loans on multiple businesses up to $5 million as well.
What is the typical down payment?+
Most transactions require a minimum 10% buyer equity injection, though structure can vary based on the deal and historical cash flow of the business.
How long does the process take?+
Transactions can close in as little as 60 days, depending on deal readiness and expeditiousness of everyone involved.
Do I need industry experience?+
Relevant experience is preferred and strengthens approval, but strong transferable skills may also qualify.
What types of businesses qualify?+
Established, cash-flowing businesses with a track record of stable revenue and profitability are typically eligible.
Is US citizenship required?+
Yes. Under updated SBA guidelines effective March 2026, all direct and indirect owners must be U.S. citizens with a principal residence in the United States. US businesses with any non-citizen ownership, including green card holders, are no longer eligible for SBA financing.
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.