When it comes to buying or selling a small business, financing often makes or breaks the deal. For many Buyers, especially first-time or non-cash Buyers, SBA lending opens the door to opportunities that would otherwise be out of reach. For Sellers, it increases the pool of qualified Buyers and helps deliver stronger offers with more certainty.

The SBA 7(a) and 504 loan programs are government-backed financing options designed to support small business ownership and growth. The 7(a) loan is most commonly used to finance business acquisitions, while 504 loans are typical for the purchase of commercial real estate or large fixed assets. In some cases, Buyers can use both in tandem to finance the purchase of a business and its associated property. These loans are attractive to Buyers because they allow qualified individuals to acquire a business with as little as 10% down. 

That low capital requirement is a game changer. It means more Buyers can afford to enter the market, and it levels the playing field for those who may have the experience and drive, but not the liquidity to cover a large upfront investment.

What makes SBA financing especially effective in business acquisitions is how the loans are structured. Repayment is typically based on the cash flow of the business being purchased. If the business generates reliable earnings, it can support the loan payments over time. Long amortization periods, often 10 years of more, keep monthly payments manageable, which further reduces risk from the lender’s perspective and enhances the Buyer’s ability to maintain a healthy operation post-acquisition.

In cases where real estate is included in the deal, the SBA’s 504 loan program can be paired with the 7(a) to finance both the business and the property. This allows the Buyer to lock in long-term financing for real estate while still acquiring the business, often with a blended structure that benefits both parties. These kinds of bundled transactions provide stability and clarity for the Buyer and help the Seller exit cleanly with few moving parts. 

For Sellers, SBA financing increases the likelihood of receiving strong, credible offers. Buyers using SBA loans are often pre-qualified through conversations with lenders, which means they’ve already taken proactive steps to confirm their financial capacity. They are often more serious and more committed, because they have already done the legwork to understand their buying power. 

Perhaps most importantly, SBA-backed deals tend to offer more cash at close than Seller-financed transactions. A Seller is more likely to receive a lump sum at closing, rather than waiting for multi-year payments through Seller notes or earnouts. This improves the Seller’s liquidity, simplifies the exit, and reduces risk.

When handled well, SBA financing creates a win-win scenario. The Buyer gets access to affordable capital and the chance to step into ownership with the support of a stable loan structure. The Seller benefits from a larger pool of credible Buyers and a cleaner, faster transaction. 

If you are planning to sell or buy a business, exploring SBA financing options early in the process can unlock the right kind of opportunities and keep the deal on track. 

When it comes to selling your business there are no do-overs. Get in touch with The Business Seller Center to secure maximum value for your exit and transition.