Financing a business purchase with an SBA 7(a) loan
A plain-English look at how most small business acquisitions are funded, and what a lender will ask of you.
The short version
Most buyers use an SBA 7(a) loan: a bank lends the money and the SBA guarantees part of it. Humble is not a lender and does not refer you to one. You pick your own bank.
The rules that matter
- 10% equity. You put in at least 10% of the total project cost (price, working capital, closing costs and the financed guaranty fee).
- Seller note on standby. A seller note on full standby for the life of the loan (no payments) can count for up to half of that 10%. The rest is your cash.
- 1.25x coverage. The business's past earnings must cover the loan payments 1.25 times. Projections cannot carry it.
- A valuation on every deal. Lenders require a valuation on any change of ownership; larger deals need an independent one.
- Ten-year term. A business purchase without real estate is typically repaid over 10 years.
- Typical rate: prime + 3%. With prime at 7.00% (October 2026, estimate) that is about 10.00%. Smaller loans may carry a higher spread.
What lenders ask for
Expect to provide a personal financial statement, a few years of personal and business tax returns, bank statements, your resume and industry experience, the purchase agreement or letter of intent, a business plan with projections, and the seller's financials.
Get it all in one packet
The Loan-Ready Packet ($99) turns your numbers into a lender-style packet with sources and uses, the 10% equity check, your estimated payment and coverage, a document checklist, and a candid page on what is still missing. You hand it to any bank. It is not an approval and Humble is not a lender.
Figures are estimates based on SBA rules as we understand them (Oct 2026); a lender decides.