Buying a Business for Under $350,000: SBA Loan or Not?

A lot of business purchases are small: a single service business, a shop, a route, a franchise resale. The SBA finances them, but the rules at this size are different in ways that change the decision, and the October 2026 rule change made one of them matter much more.

The SBA loans that fit this size

A 7(a) Small loan is capped at $350,000, and an SBA Express loan at $500,000 with a 50% SBA guaranty (maximum SBA loan amounts, SBA Express). A standard 7(a) loan works at this size too. The financing for buying a business is usually a 10-year term, and the SBA minimum down payment for a first acquisition is 10% of the total project (down payment).

Two rules that help at this size

Valuation: when the business purchase price is $350,000 or less and the buyer and seller have no close relationship, the lender may do its own internal valuation instead of ordering an independent one (the valuation rule). That saves cost and usually time.

Fees: the SBA guaranty fee steps up with loan size, so it is a smaller share of a small loan. Our guaranty fee calculator shows the exact figure.

The rule that costs more: your house

SBA lenders take the business's assets as collateral first. On a small acquisition, the hard assets rarely cover the loan, because most of the price is goodwill. When they fall short, the lender has to look to the owners' personal real estate (SBA collateral).

From October 1, 2026, that applies to 7(a) Small and SBA Express loans used to buy a business as well, which used to be treated more lightly. In practice, a buyer of a small business with equity in their home should expect the lender to ask for a lien on it. Our article on personal collateral explains when and how.

When a non-SBA acquisition loan fits better

Some lenders now offer business acquisition loans outside the SBA program for smaller deals, often without a lien on the buyer's home and with a faster process. Terms vary a lot from one lender to the next. Compare them on the same points you would an SBA loan: the rate, the term (a shorter term means a larger payment on the same amount), the down payment, the personal guarantee, any collateral, prepayment terms, and every fee.

A non-SBA loan tends to fit a buyer who would rather not pledge their home and can carry a higher payment. An SBA loan tends to fit a buyer who wants the longest term and the lowest payment, and can meet the collateral rule.

Run both before you decide

Put the loan into the payment calculator at each option's rate and term, and check the business's cash flow covers the larger payment with room to spare. If you want a second opinion on which structure fits your deal, ask us. It costs you nothing.