Short answer: yes. About half the deals we've closed used one. It's a bank loan the government partly guarantees, usually called an SBA loan. On loans numbered from October 1, 2026, you put in at least 10 percent of the cost, at least half of that from your own pocket, and deals of $3 million or more need a quality of earnings report.
Ask Google about SBA loans to buy a business and you get the same list every bank publishes: 10 to 20 percent down, a credit score around 650, three years of tax returns. When we checked in September 2026, Google's AI answer was built from bank blogs and a Reddit thread.
That list is true. It's also the easy part. The deals we see die don't die on credit scores. They die on structure, on diligence, and on money the buyer didn't know they'd have to spend.
What an SBA loan actually is
The Small Business Administration doesn't lend you the money. A bank does. The SBA guarantees part of the loan, which is why a bank will lend against a small business it would otherwise pass on.
The program most buyers use is called 7(a). It goes up to $5 million, according to the SBA's own program page. The business part of the loan runs on a 10-year term. If the deal includes real estate, only the real estate gets the longer 25-year term.
What it looks like on deals we closed
Most articles give you ranges. These are real structures.
| Deal | SBA share | The rest of the money |
|---|---|---|
| Colorado HVAC, $1.99M | 70% | 10% financial partner, 10% from our investor network, 10% seller note |
| Seven Orangetheory studios, Arizona, $1.1M | 80% | $120K down from the buyer, $100K seller note |
| Four fitness locations, Texas | 75% | 13% from investors, 10% seller note, 2% of the buyer's own cash |
| Lakeside HVAC, closed March 2025 | SBA loan | 20% seller financing, $0 down from the buyer |
| Party Patrol, Massachusetts, real estate included | SBA loan | The buyer's own retirement savings and a seller note of about 15% |
Look at the last column. On two of these five, the buyer put in 2 percent or nothing. Under the new rules, neither of those structures would work on an SBA loan.
What changed on October 1, 2026
The SBA rewrote its rulebook for these loans. The new version, called SOP 50 10 8.1, applies to any loan that gets an SBA loan number on or after October 1, 2026. We covered it in full in what the new SBA rules mean for buyers, sellers and investors. Here's what matters if you're buying.
- At least 10 percent down, and it can't be waived. At least 5 percent of the total cost has to come from you.
- Seller notes and investor money only count for half. Together with standby debt, they can cover no more than half of the required 10 percent.
- Investors in your down payment wait to get paid. If their money counts toward the 10 percent, they generally can't take distributions, other than for taxes, until the loan is repaid. On a standard loan that's ten years.
- Deals of $3 million or more need a quality of earnings report. That's an outside accountant's check of what the business really earns. The bank has to use that number to size the loan.
- The business has to qualify on what it has already earned. At least 1.25 times the loan payments, on historical cash flow. Projections don't count.
- Sellers can stay on as consultants for up to 24 months, up from 12.
Here's what that means in dollars. On a $3 million business, you need $300,000 or more down to qualify, and at least $150,000 of it has to be yours. Some of that can be a gift from family. It can't all be investor money anymore.
The cost nobody mentions
A quality of earnings report runs about $20,000 to $40,000. The bank either orders one and charges you up front, or you pay an approved firm yourself. You pay it whether the deal closes or not.
We do more than 50 of these a year, on both sides of the table. About 60 to 65 percent of the deals we check go on to close. So a buyer should expect to pay for two or three before one sticks. That's $60,000 to more than $100,000 spent before you own anything.
That's why we run a quality of earnings on every deal before it goes to a bank, and why it's included in what our buyers already pay us. We've had buyers need three or four. It cost them nothing extra. If the numbers come back wrong, we renegotiate or walk away and go back to the search. Our job is to tell you not to buy the wrong business.
When an SBA loan isn't the right road
About half the deals we've closed didn't use an SBA loan at all. Some were too big. Some had no bank financing available. Some buyers weren't citizens. Under the new rules we expect that share to rise to 60 to 70 percent.
Two roads we use instead:
- Full seller financing. Charlotte's second deal, her largest local competitor, closed with no bank at all. The seller financed the whole price. The SBA's down payment rules don't apply when the SBA isn't involved. We explain how that works in seller financing a business.
- Lenders outside the SBA. We work with specialized lenders who will fund a buyer using investor money in place of the buyer's own cash.
The point isn't to avoid SBA loans. It's to pick the loan the deal fits, instead of forcing the deal into the loan.
If you're the one selling
These rules shrink your buyer pool. We expect them to take out about 20 percent of the buyers shopping for businesses under $10 million. The ones who remain face more scrutiny from the bank, and more deals fail underwriting late, after you've already turned other buyers away.
That's the case for bringing in buyers whose financing is already checked. On our deals, the months that got lost were lost at the buyer's bank, not in the business being sold.
How long an SBA deal takes to close
Our last five buy-side deals closed 71 to 118 days after the offer was signed. The slow ones were slow because of the financing. One buyer was on an SBA loan when the government shut down, and that added two months on its own. The dates for all five are in how long it takes to buy a business.
Frequently asked questions
Can I use an SBA loan to buy an existing business?
Yes. The SBA 7(a) program is the loan most buyers use to buy an existing business, up to $5 million. About half the deals we've closed used one.
How much do I need to put down on an SBA loan to buy a business?
For loans numbered on or after October 1, 2026, at least 10 percent of the total cost, and at least 5 percent has to come from you. On a $3 million business that's $300,000 or more, with at least $150,000 of your own.
Can a seller note count toward my SBA down payment?
Partly. Seller notes, standby debt and some investor money together can cover no more than half of the required 10 percent. The rest has to come from you.
Do I need a quality of earnings report for an SBA loan?
Yes, if the purchase price is $3 million or more. The bank has to size the loan on that report's earnings. We recommend one on smaller deals too, because it's cheaper to find a problem before you close than after.
What if my deal doesn't qualify for an SBA loan?
There are other roads. A seller can finance the whole price, which takes the SBA out of it, and some lenders outside the SBA will fund a buyer using investor money. About half the deals we've closed didn't use an SBA loan.
Where to start
Solve the money before you sign the letter of intent, not after. If you're thinking about buying, start with how we work with buyers.
The new rules reward buyers who show up with the structure already built. Everyone else finds out at the bank.
