# SBA 7(a) for acquisitions

This is educational. It is not a credit decision and not legal, tax, or financial advice.

SBA 7(a) is the agency's primary program for loans that can be used to buy a business, among other uses. The current maximum loan amount, guarantee percentage, eligible uses, and rates are published by SBA, not by NewHands. Read them on sba.gov before you size a deal. As of the agency's public 7(a) materials, standard 7(a) loans are described with a maximum of $5 million. Confirm that figure. Congress and SBA policy change it.

Change-of-ownership loans follow the current SOP 50 10, which lenders use as their rulebook. Equity injection — how much cash must come in, and from whom — is defined there. A planning conversation often starts at 10 percent of the project. That is a convention you can type into the calculator. It is not NewHands applying the SOP.

Seller financing can sit beside the SBA loan. Lenders look at whether the note is on standby and at the cash flow left after both payments. The calculator computes a debt-service coverage ratio. Many lenders screen somewhere around 1.25 times. That screen is not a statute.

A 2023 SBA procedural notice for SOP 50 10 7.1 described, for a complete change of ownership, an equity injection of at least 10 percent of total project costs, and it limited when seller debt can count toward that injection. The same notice said seller earnouts were prohibited on those 7(a) loans. SOP 50 10 has been revised since that notice. The document in force on the day the lender submits the application is the one that applies. NewHands's deal-structure model keeps a contingent earnout out of the loan so the arithmetic does not depend on a rule that can move.

SCORE and America's SBDC are public mentoring and advising networks. They are a place to find a human. They are not a loan approval.

NewHands can flag that a sample listing's seller described the company as SBA-eligible. A lender is the only party that can agree.