How to Use an SBA Loan to Buy a Business
Using an SBA loan to buy a business is one of the most common ways acquisitions get financed, and the part that surprises everyone is that the lender cares more about the business you're buying than about you. If the target has solid, proven cash flow, its numbers do most of the heavy lifting. You typically bring around 10% down, your industry experience counts for a lot, and you don't always need to already own a business to qualify. Quordx Capital matches you to SBA-approved lenders in our 50+ network that actively fund acquisitions like yours, free to you.
Last updated · Reviewed by Cody Dreis
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The Loan You'll Use
Business acquisitions are almost always financed with an SBA 7(a) loan: up to $5 million, repaid over as long as 10 years, at rates well below most alternative products. The business's cash flow is what the lender underwrites: they want to see it can comfortably cover the new loan payment with room to spare.
What You Personally Need to Bring
This is the part nobody explains clearly.
Down payment:: The SBA requires at least 10% equity injection on a change of ownership. On a $1 million business, that's $100,000.
The seller can cover half:: Up to half of that injection can come from a seller note on full standby. The seller agrees to be paid their slice later, over time, instead of all at closing. That can drop your own cash to as little as 5% of the project. On that $1M business, closer to $50,000.
It has to be your money:: Your equity must be sourced and documented: savings, a retirement account, or a documented gift all work. You cannot borrow your down payment with another loan. Lenders catch it, and it kills the deal.
Credit:: Lenders usually want a personal score around 680 or higher for an acquisition, a little stricter than a standard SBA loan.
Cash left after closing:: There's no magic net worth number. What lenders care about is post-close liquidity: the cash you still have after the down payment and closing costs, usually a few percent of the loan. Don't drain every account to scrape the down payment together. A reserve actually helps you get approved.
Experience:: The lender wants to see you can run what you're buying. Industry or management experience counts for a lot. You don't always need to have owned a business before, but you can't walk in blind.
Expect to put up collateral on larger loans: the business assets plus, often, a lien on a home with real equity. Anyone owning 20% or more of the new business signs a personal guarantee. Both are standard for SBA, not red flags.
Documents to Have Ready
Beyond your own returns, P&L, balance sheet, and bank statements, an acquisition adds the seller's financials and tax returns, the purchase agreement, and usually a valuation of the business. The lender needs to confirm you're paying a fair price for something that actually makes money.
How Quordx Capital Works
One application covers your funding goal, your business and buyer profile, and your documents. Quordx Capital's AI matches you to the SBA lenders that actually fund acquisitions in your industry and deal size, not a generic list. No hard credit pulls until you accept an offer.
What to Expect
SBA acquisition underwriting takes a few weeks, but you skip the weeks of hunting for the right lender. Within a couple of days you'll have real options in front of you. If a faster product fits better, the same network covers it.
Quordx Capital is free to borrowers: the lender pays the commission, never you.
Apply for Funding
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Apply for Funding
No obligation · Initial inquiry doesn't impact credit · Takes about 10 minutes
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Quordx Capital is a business funding broker, not a lender. We facilitate introductions between U.S. small and medium-sized businesses and lenders or capital providers in our network. All credit decisions, funding amounts, rates, fees, repayment terms, and timelines are determined solely by individual lenders based on their own underwriting criteria.
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