An SBA 7(a) acquisition loan typically means at least 10% down, a 10-year note at a rate capped near Prime + 3, and a business whose earnings, after a salary for you, cover the loan payments by at least about 1.15×. The lender also underwrites your whole financial life along with the business, and most buyers don't expect that.
The four numbers that decide it
| Number | The rule of thumb | What it means for you |
|---|---|---|
| Down payment | At least 10% of the total project cost | On a $600K deal, plan for $60K+ in cash. A seller note on full standby can sometimes cover part of the 10%, but the SBA caps how much, so ask your lender. |
| Interest rate | Capped on a sliding scale by loan size: Prime + 6.5 up to $50k, + 6.0 to $250k, + 4.5 to $350k, + 3.0 above that (about 13.25%, 12.75%, 11.25% and 9.75% at the WSJ Prime of 6.75%, as of 2026-07-29) | Your lender sets the actual rate, and it can be lower than the cap. Budget at the cap, and any lower rate leaves you extra room. |
| Term | 10 years for a business acquisition | Longer than a conventional business loan, which is what makes the payments carryable on main-street earnings. |
| Coverage floor | About 1.15× DSCR, after a new-owner salary | The business's earnings minus a market salary for whoever runs it must cover the annual loan payments with at least ~15% room. |
A worked example: the same business at two prices
Take a service business with $180,000 of verified SDE. You put 10% down. The lender budgets a $60,000 salary for a manager to replace the owner (money the business must pay someone, even if that someone is you).
At a $600,000 asking price, the loan is $540,000. That's about $7,062 a month at 9.75% over 10 years, or roughly $84,700 a year. After the $60,000 salary, $120,000 of earnings covers $84,700 of payments: about 1.42× coverage. That clears the lender floor with money to spare.
At a $750,000 asking price for the same business with the same earnings, the loan is $675,000 and the payments rise to about $8,827 a month, or $105,900 a year. On the raw SDE that still looks fine (1.70×). But after the salary, $120,000 covers $105,900 at only 1.13×, which is below the floor. The business is the same in both cases. The higher price is what fails, and a lender who likes the deal still can't change the math.
As the example shows, the raw numbers on a listing almost always look better than the numbers a lender will underwrite. Run the quick version yourself on the does-it-pencil check before you get attached to a listing.
What the lender checks beyond the math
Clearing the coverage floor is only the start of the lender conversation. The application (SBA Form 1919 and a Personal Financial Statement) walks through your history, and a few answers matter more than buyers expect:
- You'll sign a personal guaranty. Owners of 20% or more personally promise to repay if the business can't. It's standard and you can't negotiate it away, so understand it before you start.
- Past federal debt is the big one. A past loss to the government on any federal loan is one of the few answers that can rule out an SBA loan on its own. A federal debt that's behind on payments holds things up until it's caught up.
- A bankruptcy doesn't automatically block the loan. Expect the lender to ask for the discharge paperwork and the story behind it.
- Open legal matters pause things. Pending charges or lawsuits usually put an application on hold until they're resolved. Give the lender the case details early instead of waiting for closing.
- Child support arrears block approval. More than 60 days behind stops an SBA approval until it's resolved.
For every item on this list, flag it to your lender early. They'll tell you what it means for the application and what paperwork it needs. The lender is the authority here, and telling them early keeps any of these from becoming a surprise at closing.
Walk in with the paperwork started
A buyer who shows up with the coverage math run the lender's way, the add-backs verified, and Form 1919 and the Personal Financial Statement already filled out has a much better meeting with a lender than a buyer with a listing printout. Scope builds that head start for you. It runs the global DSCR (business and personal, the way the lender will) and prefills the SBA forms from a profile you enter once.
Get your SBA head start free. Analyze your first deal, see the coverage math a lender will run, and start the forms. No credit card needed.
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FAQ
How much cash do I need in total?
Plan on the 10% injection plus working capital, closing costs, and a cushion for the transition. Most buyers should model 12% to 15% of the purchase price in total cash before they feel comfortable. Part of the injection can sometimes come from a standby seller note, within SBA limits your lender will confirm.
If my numbers clear the floor, is the loan approved?
Not automatically. Clearing the floor gets you a serious conversation with a lender. The lender then verifies the earnings against tax returns, subtracts the salary, folds in your personal finances, and runs the eligibility checks above. The lender is the authority on approval. The math tells you whether the conversation is worth having, and at what price.
When should I first talk to a lender?
Talk to one as soon as a deal looks real. A good SBA lender will tell you for free whether the loan can work, and anything on the "beyond the math" list above is worth flagging in that first conversation.
Educational content, not financial, legal, or tax advice for your situation. SBA rules, rate caps, and program terms change. Your lender, CPA, and attorney are the authorities on your specific deal.