The SBA 7(a) loan is the U.S. Small Business Administration's flagship guaranteed-lending program and the most common way to finance a business acquisition. It allows as little as a 10% equity injection, terms up to 10 years (25 with real estate), and variable rates tied to WSJ Prime (6.75% in July 2026).
A typical 7(a) acquisition
| Source | Amount |
|---|---|
| SBA 7(a) bank loan (90%) | $900,000 |
| Your cash (5%) | $50,000 |
| Seller note on standby (5%) | $50,000 |
The loan carries a guaranty fee, a personal guarantee, and must clear a DSCR of about 1.15×, 1.25×.
Why it matters when buying a business
The 7(a) is the reason ordinary buyers can acquire businesses worth far more than their savings, the government guarantee lets banks lend on cash flow, not just collateral. Master its levers, injection, standby notes, DSCR, and the same deal can go from declined to funded.
