Summary of SBA 7(a) Loan Rules

SBA lender

SBA loans can be a great way to finance a small business acquisition. Like most government programs, SBA loan programs have plenty of rules. In this post, I summarize the highlights of the rules for SBA 7(a) business acquisition loans.

There are three key sources of information about SBA loan rules: the U.S. Code of Federal Regulations, the relevant SBA SOP, and the SBA website. The SBA’s authorization boilerplate is another source of information about SBA loans, and it supersedes the SOP if there’s a conflict. Some of the text below is taken directly from the government sources but not set off in quotes to enhance readability.
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SBA 7(a) Loans for Buying a Business

SBA 7(a) Loan

The problem with paying for a business acquisition is coming up with the money. The buyer’s savings is a key component of acquisition financing. And in today’s business environment, sellers generally finance at least part of the deal when they’re selling a main street business. But that often leaves a significant portion of the purchase price to be funded by other sources.

A lot of buyers turn to SBA-backed loans to bridge the gap. Is an SBA loan right for you? Here are some pros and cons to help you decide whether you should explore an SBA 7(a) loan, the type of SBA loan that’s most common for acquisition financing.
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