SBA Loans to Buy a Business
An SBA 7(a) loan is how most small businesses change hands. Ten percent down, a ten year term with no balloon, and a lender who has financed your kind of deal before. Here is what it takes, what it costs, and who actually lends, from the SBA's own loan records.
See if your deal qualifies →SBA FOIA 7(a) loans flagged as a change of ownership, FY2021 through FY2026. Rate is for approvals from FY2025 on.
How an SBA loan to buy a business works
A bank or other SBA lender makes the loan, and the SBA guarantees most of it. That guarantee is why a lender will finance goodwill, the part of the price that is cash flow and customers rather than equipment and inventory, which a conventional bank loan usually will not.
One loan can cover the purchase price, the closing costs, working capital to carry you through the transition, and the building if it is part of the sale. The business portion is a ten year term with no balloon payment and no prepayment penalty. Add owner-occupied real estate and the term stretches, up to twenty five years when the property is most of the project.
The lender underwrites the business you are buying more than you. The first question is whether its cash flow, after paying you a reasonable salary, covers the new loan payment with room to spare. The second is whether you can run it: industry or management experience, or a plan for the seller's transition that fills the gap.
What you need to put down
Ten percent of the total project cost is the SBA minimum for buying a business, and the project cost is everything the loan pays for, not just the price on the letter of intent.
At least half of that ten percent has to be your own cash, and the lender will trace where it came from. The rest can come from a seller note, but only one on full standby for the entire life of the SBA loan: no principal and no interest paid to the seller until the SBA loan is gone. A note on a two year standby, which used to count, no longer does.
A $1,000,000 total project needs $100,000 of equity. At least $50,000 is your cash. Up to $50,000 can be a seller note on full standby. The SBA loan covers the other $900,000.
What it costs
SBA 7(a) rates are Prime plus a spread. On loans above $350,000, where most acquisitions sit, the SBA caps the spread at 3.0 percent, which is 10.00% with Prime at 7.00% (as of September 17, 2026). That is the ceiling, not the typical deal: the median starting rate on recent approved acquisition loans was 9.00%.
On the median acquisition loan of $685K over ten years at 9.75%, the payment is about $8,958 a month. Most rates are variable, so that moves with Prime.
On top of interest there is a one-time SBA guaranty fee, set each federal fiscal year and scaled to the loan size, plus closing costs: a business valuation, legal work, and appraisals and title if real estate is involved. All of it can usually be financed into the loan.
The lenders who finance the most business purchases
Live Oak Banking Company has approved more SBA acquisition loans than any other lender since FY2021, averaging $1.4M. Volume is not the same as fit: the right lender is the one that has done your industry and your deal size, which is the match we make.
| # | Lender | Acquisition loans | Total Volume | Avg Loan |
|---|---|---|---|---|
| 1 | Live Oak Banking Company | 3,768 | $5.4B | $1.4M |
| 2 | The Huntington National Bank | 2,570 | $2.1B | $804K |
| 3 | Byline Bank | 745 | $1.1B | $1.4M |
| 4 | First Internet Bank of Indiana | 613 | $848.9M | $1.4M |
| 5 | Hanmi Bank | 584 | $533.0M | $913K |
| 6 | Celtic Bank Corporation | 580 | $889.0M | $1.5M |
| 7 | United Midwest Savings Bank National Association | 551 | $575.1M | $1.0M |
| 8 | GBank | 501 | $1.4B | $2.7M |
| 9 | Old National Bank | 479 | $541.0M | $1.1M |
| 10 | Manufacturers and Traders Trust Company | 446 | $278.3M | $624K |
Source: SBA FOIA 7(a) loan-level data, loans flagged as a change of ownership, FY2021 through FY2026.
All SBA lenders, ranked →Buying in a specific industry
Go deeper on buying a business
- How to Finance the Purchase of an Existing Business: The Real-World Guide →
- What Lenders Actually Look for in an SBA Acquisition Loan →
- How Seller Notes Work (And Why Lenders Love Them) →
- How to Buy a Business with No Money Down (The Real Answer) →
- How to Buy a Business with As Little Money as Possible →
- DSCR Explained in Plain English →
- What Is a CIM and Why Does It Matter for Your SBA Deal? →
- SBA Pre-Approval Letter: What It Is and Do You Need One →
- How Long Does an SBA Loan Take? Real Timelines, Not Marketing Copy →
- Partner Buyout Financing: How It Works →
- SBA Makes Single-Location and Carve-Out Acquisitions Actually Possible →
Buying a business with an SBA loan: common questions
Can I use an SBA loan to buy a business?
Yes. Buying an existing business is one of the most common uses of an SBA 7(a) loan. The loan can cover the purchase price, including goodwill, plus closing costs, working capital for the transition, and the building if you are buying that too.
How much do I need to put down to buy a business with an SBA loan?
At least ten percent of the total project cost. At least half of that has to be your own cash. The rest can be a seller note, but only if the note is on full standby, with no payments of principal or interest, for the entire life of the SBA loan.
What is the interest rate on an SBA acquisition loan?
SBA 7(a) rates are Prime plus a spread, and above $350,000 the SBA caps that spread at 3.0 percent, which is 10.00% with Prime at 7.00% (as of September 17, 2026). The median starting rate on recent approved acquisition loans was 9.00%, so most deals price below the cap.
How long is the term on an SBA loan to buy a business?
Ten years for the business itself, with no balloon payment. If owner-occupied real estate is part of the purchase, the term can stretch toward twenty five years depending on how much of the project the property is. A ten year SBA loan has no prepayment penalty.
Does the seller have to stay on after closing?
Not as an owner. In a full change of ownership the seller cannot keep any ownership stake, but they can stay for a transition period as an employee or consultant, usually up to twelve months. Many lenders want that transition in the plan.
How long does it take to get an SBA loan to buy a business?
Sixty to ninety days from a complete file is the honest range for a straightforward acquisition. The file sets the clock more than the bank does: a lender with SBA Preferred Lender status approves in house, and anything that needs a third party, like an appraisal or a license transfer, runs on its own schedule.
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