What an SBA 7(a) acquisition loan requires, as of October 1, 2026.

Measured on total project cost, or for an owner buyout on the purchase price. For a first acquisition the injection cannot be reduced or eliminated. For a business expansion or an owner buyout the lender may reduce or eliminate it where the borrower has the liquidity and working capital to sustain operations after the transaction and no negative net worth at the last fiscal year end.

Seller debt counts toward the equity injection only if it is subordinated and on full standby, with no payments of principal or interest for the term of the 7(a) loan, and only up to half of the required injection. Every other seller note is debt.

Where the business purchase price, real estate excluded, exceeds $350,000, or the buyer and seller are related, the lender must obtain a valuation from an accredited, independent valuator, prepared for the lender. A valuation prepared for the buyer or the seller may not be used.

For an initial acquisition or a business expansion at a business purchase price of $3 million or more, measured before buyer equity or seller debt, the lender must obtain a quality of earnings report with a cash proof, from an independent financial professional, for the lender. A report the buyer commissioned may be used only after one of the lender’s approved vendors reviews it; one prepared by or for the seller may not. Owner buyouts, employee stock ownership plans, cooperatives and owner-occupied special purpose properties are exempt.

1.25 for an initial acquisition, an owner buyout, or a purchase by an employee stock ownership plan or cooperative; 1.15 for a business expansion. Earnings before interest, taxes, depreciation and amortization, on a historical basis or with prudent, documented adjustments, divided by all debt service after the transaction, using the last fiscal year or the average of the last two. Where a quality of earnings report is required, the lender uses its earnings. Projections may be used only for an owner-occupied special purpose property.

For the business, goodwill and working capital, with no balloon. Only the real estate portion may run longer, to 25 years, blended on a weighted average. An owner-occupied special purpose property may run to 25 years where real estate is 85 percent or more of total project costs.

In an initial acquisition or a business expansion, the seller may not remain as an officer, director, stockholder or employee. A consulting role of up to 24 months in total, extensions included, is allowed. Seller earnouts are prohibited.

From March 1, 2026, every direct and indirect owner and every SBA-required guarantor must be a U.S. citizen or national with a principal residence in the United States, its territories or possessions. Lawful permanent residents are no longer eligible. A narrow exception allows some limited or supplemental guaranties.

For fiscal year 2027, set by the gross loan amount and charged on the guaranteed portion: 2 percent for loans of $150,000 or less; 3 percent to $700,000; above that, 3.5 percent on the first $1 million of the guaranteed portion and 3.75 percent on the rest. A $5 million loan at a 75 percent guaranty carries an upfront fee of $138,125. Loans of $700,000 or less to manufacturers, food supply chain businesses and rural businesses carry none.