The short version: SBA's SOP 50 10 8 (effective June 2025) sets a minimum 10% equity injection on acquisitions, of which the buyer must contribute at least 5% in cash. A seller note can cover up to half of the injection, but only on full standby for the loan's life (documented on Form 155). Separately, a 2026 citizenship rule requires U.S.-citizen or U.S.-national ownership (with a small ~5% allowance). And if a seller keeps even 1%, they must personally guarantee the loan for two years.
What SOP 50 10 8 changed
The SBA's Standard Operating Procedure is the rulebook every 7(a) lender underwrites to. Version 50 10 8 took effect in June 2025 and tightened several things that had loosened up in prior years. For anyone buying a business with an SBA loan, three of those changes matter most: the size of your down payment, how a seller note is treated, and whether the seller stays on the hook.
None of these are dealbreakers. But if you learned the game under the older rules, or from a course written a couple of years ago, your mental model is out of date. Let's fix that.
The 10% injection, and the 5% cash floor
SBA now requires a minimum 10% equity injection on a change-of-ownership loan. That's the "skin in the game" the agency wants before it guarantees the bank's money. The nuance people miss: the buyer must put in at least half of that in cash, so on a typical deal, roughly 5% of the project cost has to be your own money.
This is why "no money down" is, in honest terms, closer to a 5% cash floor. You can be clever about where the rest of the injection comes from, but that first slice is real. On a $1,000,000 acquisition, plan on about $50,000 of your own cash as the practical minimum. We walk the full stack in the real math of buying with no money down.
Seller notes now have to be on full standby to count
A seller note is financing the seller provides, you pay part of the price over time instead of all at close. Under SOP 50 10 8, a seller note can count toward the equity injection, but only up to half of the required 10%, and only if it's on full standby for the entire term of the SBA loan. Full standby means no principal and no interest payments during that period. It's documented on SBA Form 155.
Why does the SBA care? Because a note the seller can collect on isn't really equity, it's just more debt competing for the same cash flow. Putting it on full standby freezes it, so it behaves like patient capital and protects your debt service coverage. A seller note that's only on partial standby (interest-only, say) generally won't count toward your injection.
The practical takeaway
If you want a seller to help fund your down payment, the note has to be structured on full standby with Form 155 from the start. Negotiate that into the LOI, not after the bank flags it in underwriting.
The 2026 citizenship rule
The change catching people off guard in 2026 is on ownership eligibility. Current SBA guidance requires that businesses receiving 7(a) or 504 financing be owned by U.S. citizens or U.S. nationals. There's a small allowance, on the order of 5%, for other owners, but the core of the cap table has to meet the citizenship test.
For a solo buyer who's a U.S. citizen, nothing changes. Where it bites is partnerships and rollover deals: if a co-investor, a family member, or a selling owner staying on doesn't meet the standard, it can complicate, or disqualify, the loan. Because the exact thresholds and documentation are still settling in, confirm the current standard with your lender before you structure a multi-owner deal. Don't assume; ask.
Confirm this one with a lender
The citizenship rule is newer and interpreted slightly differently bank to bank. Treat the ~5% allowance as a starting point for the conversation, not a guarantee. Your SBA-preferred lender is the authority on how they'll underwrite it.
If the seller keeps a stake, they guarantee the loan
Another rule that shapes deal structure: if the seller retains any ownership after the sale, even 1%, that seller is required to provide a personal guaranty for two years. Some sellers are happy to; a partial rollover can align incentives during the transition. Others want a clean break and will decline the moment they hear "personal guaranty."
The lesson is to know this before you propose an earnout or equity rollover. A full change of ownership is the simplest path. If you want the seller to keep a slice, price the two-year guaranty into the negotiation so it isn't a surprise that blows up the deal at the finish line.
What buyers should actually do
- Budget the 5% cash floor as real. On a $1M deal, that's about $50,000 of your own money. Everything else is structure.
- Put seller notes on full standby. Write "full standby, Form 155, life of loan" into your LOI if you want the note to count.
- Vet your cap table for citizenship early. Any non-citizen owner above the small allowance needs a lender conversation before you write an offer.
- Decide on rollovers up front. If the seller keeps equity, they guarantee the loan for two years, get their buy-in before the LOI.
- Work with an SBA-preferred lender. They live in the current SOP daily and will tell you how they read each rule.
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One useful email a week. Unsubscribe anytime.Frequently asked questions
SBA requires a minimum 10% equity injection on an acquisition, and the buyer must contribute at least half of that, about 5% of the project, in cash. A full-standby seller note can cover the other 5%.
Yes, up to half of the required 10% injection, but only if the note is on full standby (no principal or interest) for the entire life of the SBA loan, documented on Form 155.
SBA guidance now requires 7(a) and 504 borrowers to be owned by U.S. citizens or U.S. nationals, with a small allowance (around 5%) for others. It mainly affects partnerships and rollovers. Confirm the exact standard with your lender.
If a seller retains even 1% ownership, SBA rules require them to personally guarantee the loan for two years. A full change of ownership avoids that obligation.
Sources
- SBA SOP 50 10 8 (effective June 1, 2025), equity injection, seller-note standby, and change-of-ownership requirements, sba.gov SOP 50 10.
- SBA Form 155 (Standby Agreement), sba.gov Form 155.
- 2026 ownership/citizenship guidance and personal-guaranty rules, SBA 7(a) program policy; confirm current standard with an SBA-preferred lender.
Keep reading
The Real Math of Buying "With No Money Down"
Where the 5% cash floor comes from, a $1M deal, line by line.
Read → LessonsHow to Read a Business-for-Sale Listing
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Read → Learn · SBA LoansSeller Notes on Full Standby
How Form 155 standby notes fund your injection and protect DSCR.
Guide → Learn · SBA LoansDSCR Explained
The one number that approves or kills your SBA deal.
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