With an SBA 7(a) loan, you need about 10% of the purchase price as an equity injection, and up to half of that can come from a seller note on full standby, so your own cash can be as little as 5%. On a $1,000,000 business that's $100,000 of equity, potentially as little as $50,000 of your own money. Beyond the down payment, budget for closing costs, SBA fees, working capital, and due-diligence fees, several of which can be financed into the loan.
The core rule: 10% equity injection
Under SBA SOP 50 10 8, a complete change of ownership requires a minimum 10% equity injection. That's the floor lenders must document. The good news: a portion can be a seller note rather than cash.
| Source | Amount | % of price |
|---|---|---|
| SBA 7(a) bank loan | $900,000 | 90% |
| Your cash injection | $50,000 | 5% |
| Seller note (full standby) | $50,000 | 5% |
| Total | $1,000,000 | 100% |
A seller note only counts toward the injection if it's on full standby for the life of the loan, is no more than 50% of the injection, and is documented on SBA Form 155. If the seller won't stand fully behind a note, you'll need the full 10% in cash.
The costs beyond the down payment
- Closing costs & SBA guarantee fee, a percentage-based fee on the guaranteed portion, plus lender/packaging and legal closing costs.
- Working capital, cash to make payroll and pay suppliers from day one. Often financed into the loan.
- Due diligence, a quality of earnings review, attorney fees, and possibly a valuation.
- Personal reserve, money to live on while you learn the business; lenders like to see it, and it protects you.
The down payment is the headline number. The reserve is the one that keeps you sane after closing.
Can you buy with (almost) no money down?
True zero-down SBA deals are rare because the 10% injection applies to full changes of ownership. But you can shrink your out-of-pocket cash with a full-standby seller note, investor equity (partners contributing part of the injection), or a partial buyout / equity rollover where the seller retains a stake. Some real equity is almost always required, see can seller financing count as your down payment.
Run your own numbers
See the cash you'd need, the monthly payment, and the max price the cash flow supports.
Frequently asked questions
With an SBA 7(a) loan, a full change of ownership needs a minimum 10% equity injection. Up to half can be a full-standby seller note, so your own cash can be as low as 5%, about $50,000 on a $1,000,000 business.
True zero-down SBA acquisitions are rare because of the 10% injection rule. Buyers reduce cash with a full-standby seller note, investor equity, or a partial buyout, but some genuine equity is almost always required.
Closing costs and SBA guarantee fees, working capital to run the business, legal and due-diligence fees, and a personal cash reserve. Several of these, including working capital, can be financed into the loan.
