Begin with the project, not a down-payment slogan
A lender needs to know what is being acquired, how the business will operate, how much total cash the project uses and where each source comes from. A business-only purchase, a property-heavy acquisition and an equipment upgrade are not interchangeable transactions. Define the assets, ownership, operating entity and uses of proceeds before comparing loan terms.
The SBA 7(a) program can support eligible acquisitions and other business uses. An SBA guaranty does not remove lender underwriting or establish that a specific wash qualifies. Ask the lender which current rule version, ownership requirements, valuation work and environmental process apply to the proposed structure.
Current acquisition equity rules need the right denominator
Appendix 15 identifies a 10% minimum equity injection for an initial acquisition, measured against total project cost. Different transaction types can have different conditions. Limited equity sources collectively may provide no more than half of the required injection. Seller debt counted as equity must meet full-standby and subordination requirements; a generic historical two-year payment pause is not the same arrangement.
The minimum is not the buyer’s entire cash requirement or a promise that the lender will finance the remainder. Valuation support, liquidity, closing expenses, lender overlays and working capital can increase the cash needed. Confirm each proposed source rather than counting every deposit or paid advisor invoice as qualifying equity.
Write a sources-and-uses schedule
List business/property price, eligible transaction expenses, immediate capital work, opening liquidity and any other actual use separately. On the source side, show buyer cash, senior debt, paying seller debt, standby debt and other permitted sources. Resolve any gap before assuming a percentage down payment makes the project feasible.
| Question | Evidence to prepare |
|---|---|
| What is being purchased? | Purchase agreement scope, asset list, allocation and real-estate/lease documents |
| Can historical cash support debt? | Tax returns, financials, reconciliation, management costs and applicable valuation/QoE findings |
| Where does equity come from? | Source records, transfer trail, documentation of debts/gifts and lender acceptance |
| What property risks remain? | Lender environmental instructions, existing reports, actual discharge arrangement and current approvals |
| Who will operate it? | Ownership/management plan, relevant experience and staffing cost |
Do not assume every acquisition receives 25 years
Maturity depends on permitted uses and the applicable rules. Property inclusion can matter, but the mere presence of real estate does not by itself justify any requested term. Obtain the lender’s written explanation for the actual structure.
The return calculator shows how cash changes between a ten-year and twenty-five-year scenario. An attractive result under the longer term is not evidence that the term is available. Compare the lender’s proposed repayment structure, not an online default.
Seller financing and 504 require separate review
A seller note can change leverage, cash flow and collection risk. Identify whether it makes payments, accrues interest, balloons, is subordinated or is intended to count toward required equity. Coordinate its documents with the senior lender before promising a seller current payments.
The 504 program serves eligible fixed-asset projects under its own rules and structure. Do not assume it is interchangeable with a 7(a) acquisition loan or that every project has the same equity contribution. Ask a CDC/lender to analyze the actual eligible uses, property type and borrower status.
Plan diligence in parallel
Lender valuation, environmental work, landlord consent, title issues and financial verification can have different lead times. Track responsibility, required evidence and unresolved issues. A calendar estimate without those dependencies is not a reliable closing plan.
Bring the evidence to an early financing conversation. Compare rate basis, fees, maturity, amortization, collateral, guarantees, prepayment terms and all debt obligations. Current rates are not hard-coded on this site; request a dated lender quote.
Sources and scope
Public guidance reviewed October 17, 2026. Rules and individual transaction facts can change; a source does not establish a particular property’s compliance, financing approval or value.