Yes, the SBA 7(a) loan is the single most common way Americans buy an existing small business. It can finance up to 90% of a qualifying acquisition, so you may only need about 10% down, with repayment terms up to 10 years on goodwill-heavy deals. The business's own cash flow repays the loan, which is why buyers can control a profitable company for a fraction of its price.
Why the 7(a) is built for buyers
The SBA doesn't lend money directly. It guarantees a portion of a bank's loan, which lowers the bank's risk and lets it finance deals a conventional lender would decline. For business acquisitions the 7(a) program is the flagship: long amortization, no balloon, and only a 10% equity injection versus the 20 to 30% a conventional acquisition loan often demands.
| Feature | Typical |
|---|---|
| Down payment (equity injection) | 10% minimum of project cost |
| Max loan amount | Up to $5,000,000 |
| Term (goodwill / business only) | Up to 10 years, no balloon |
| Rate | Prime (~6.75%) + spread, roughly 9.5 to 11.75% |
| Personal guarantee | Required from owners of 20%+ |
What has to qualify, you and the business
Two things get underwritten: you and the target. On your side, lenders generally look for a credit score around 680+, relevant management experience, U.S. citizenship or lawful permanent residency, clean credit history, and the cash for the injection. On the business side, the numbers have to work, the cash flow needs to cover the new debt payment with a DSCR of about 1.15 to 1.25× or better.
Not everything is eligible: passive real-estate holding, lending businesses, and speculative ventures generally can't use a 7(a). Most operating service, retail, and franchise businesses can. Read the full SBA eligibility requirements, then walk through the 7(a) acquisition process step by step.
Run your numbers first
Before you fall in love with a listing, model the payment. Our SBA loan calculator shows the monthly payment and whether the deal's cash flow can carry it, the single biggest factor in getting approved.
Frequently asked questions
Yes, the SBA 7(a) loan is the most common way to buy an existing U.S. business, financing up to 90% of the deal with as little as 10% down.
Most for-profit U.S. operating businesses with verifiable cash flow, service, retail, manufacturing, many franchises. Passive real estate and lending businesses are generally ineligible.
Generally a ~680+ credit score, relevant experience, U.S. citizenship or residency, clean credit, and cash for a 10% injection. Owners of 20%+ sign a personal guarantee.
