The 10% down reality
SBA 7(a) requires a 10% total equity injection on business acquisitions. Half of that can be a seller-standby note on full standby for the life of the loan. In practice a $5M acquisition can close with $250K of your own cash if the seller agrees to carry $250K on standby. Most buyers never hear this because their broker never had a reason to say it.
7(a) vs 504 - use the right tool
| Program | Best for | Ceiling | Down |
|---|---|---|---|
| SBA 7(a) | Business acquisitions (goodwill included) | $5M | 10% (half can be standby note) |
| SBA 504 | Owner-occupied real estate & heavy equipment | $5.5M+ | 10% (real estate only) |
Seller standby notes - the closer's tool
A seller-standby note is seller financing that sits behind the SBA on the cap table, collects no payments during the SBA loan, and counts toward the buyer's equity injection. It is the single most powerful lever in a lower-middle-market deal. It bridges valuation gaps, protects buyer cash, and keeps the seller emotionally aligned through transition.
Personal guarantee - the truth
Every 20%+ owner personally guarantees an SBA 7(a) loan. Spouses in community-property states usually sign a limited guaranty. That is why buy-box design, working capital modeling, and lender selection matter. You are underwriting on your household, not just your balance sheet. Choose the deal that survives a bad quarter, not the one that looks biggest on paper.
ETA vs search fund vs solo buyer
- ◆ETA (self-funded): You use SBA + seller note, sit in the operator seat, keep 100% equity. Best if you can operate and want max upside.
- ◆Traditional search fund: Investors fund your search, then a portion of the acquisition. You take a smaller equity slice for capital and mentorship. Best if the deal is above SBA ceiling.
- ◆Solo passive buyer: This does not exist for SBA-backed deals. SBA requires active operator involvement. If you want passive, you need alt-capital or an equity partner.
Why deals stall - and how ours do not
SBA deals stall on QoE surprises, working-capital pegs, or lender-side turn times. Our SBA closing checklist front-loads reconstruction, negotiates the peg before LOI hardens, and runs weekly lender standups until the wire hits. That is the difference between a 150-day close and a 90-day close.
Beyond SBA: our capital stack
SBA is the workhorse under $5M, but not every deal fits SBA and not every deal should. We work with multiple capital partners, offer revenue-based financing, and structure creative deal terms so closings happen even when the SBA path won't. That includes private credit and family-office equity for middle-market deals, revenue-based financing for non-dilutive growth capital and add-ons, and seller notes, earn-outs, and equity rolls that reduce cash-at-close. We run these paths in parallel and pick the combination that actually funds.
Book a call. We will pressure-test your buy box against SBA reality.
Free 20 minutes with our acquisitions team. Bring the deal you are looking at.