This guide provides general educational information—not legal, tax, accounting, financial, or investment advice. Confirm material decisions with qualified professionals.
What an SBA 7(a) loan is
The SBA does not ordinarily lend the acquisition money directly. It provides a guaranty to approved lenders under program rules. Eligible uses can include changes of ownership, working capital, equipment, and real estate, subject to the lender’s approval and current SBA requirements.
Eligibility is only the beginning
The business and transaction must meet program requirements, but the lender also makes a credit decision. Expect review of repayment ability, equity injection, buyer qualifications, purchase terms, valuation, projections, and available collateral under applicable rules.
Documents buyers should prepare
Prepare personal financial statements, tax returns, a resume, ownership information, a business plan, projections and assumptions, purchase documents, and requested information about affiliates. The seller typically provides historical business financials, tax returns, debt, contracts, and operational information.
Questions to ask participating lenders
Ask about acquisition experience, expected equity contribution, treatment of seller notes, valuation process, collateral and guarantee requirements, estimated timeline, fees, and the specific documents needed for an initial assessment.
Verify current requirements
SBA rules and lender practices change. Confirm current terms directly with the SBA and participating lender before relying on any estimate or structuring a transaction.
Primary sources and further reading
Always confirm current requirements directly with the relevant agency, lender, or professional.