{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-buy-out-a-minority-partner-with-less-than-20-ownership","api_url":"https://dealroom.so/api/public/questions/can-an-sba-7-a-loan-be-used-to-buy-out-a-minority-partner-with-less-than-20-ownership","question":"Can an SBA 7(a) loan be used to buy out a minority partner with less than 20% ownership?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, an SBA 7(a) loan can be used to buy out a minority partner, regardless of their ownership percentage, as long as other eligibility requirements are met.","rule":"The SBA 7(a) loan program facilitates changes of ownership, including partner buyouts. There is no specific restriction based on the percentage of ownership being acquired, as long as the transaction results in a viable business entity and meets general eligibility criteria for the loan and the borrower. The remaining owner's experience and the business's ability to service the debt will be key.","example":"A business has three partners: A (60%), B (25%), and C (15%). Partner C wishes to be bought out for $150,000. An SBA 7(a) loan can be used by the remaining partners (or Partner A buying out C) to finance this $150,000, assuming the business can support the debt and other conditions are met.","what_lenders_check":"Lenders will assess the post-buyout ownership structure, the experience and character of the remaining owners, and the business's cash flow to ensure it can support the new debt burden. They also look for any potential affiliation issues that might arise.","required_facts":["Minority partner buyout","Eligibility","Ownership change","Business viability"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"If I'm buying out a partner, does the remaining partner also need to personally guarantee the SBA loan for $500,000?","url":"https://dealroom.so/sba-7a/questions/if-i-m-buying-out-a-partner-does-the-remaining-partner-also-need-to-personally-guarantee-t"},{"question":"If I am buying out a partner, does the SBA require the business to pass a cash flow test post-acquisition?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-does-the-sba-require-the-business-to-pass-a-cash-flow-test-po"},{"question":"If I am buying out a partner, how does the SBA ensure the purchase price is fair and justifiable?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-how-does-the-sba-ensure-the-purchase-price-is-fair-and-justif"},{"question":"Can an SBA 7(a) loan be used to purchase a business if the seller will retain a minority ownership stake?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-if-the-seller-will-retain-a-minority-ow"},{"question":"What are the requirements for the seller in an SBA 7(a) business acquisition loan?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-for-the-seller-in-an-sba-7-a-business-acquisition-loan"},{"question":"Can an SBA 7(a) loan be used to fund a partner buyout with an earn-out provision?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-fund-a-partner-buyout-with-an-earn-out-provision"}],"related_terms":[{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Minority Partner","url":"https://dealroom.so/glossary/minority-partner"},{"term":"Lease with an option to purchase","url":"https://dealroom.so/glossary/lease-with-an-option-to-purchase"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"SBA 7(a) Loan Program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"},{"term":"SBA 7(a) loan guaranty","url":"https://dealroom.so/glossary/sba-7-a-loan-guaranty"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-buy-out-a-minority-partner-with-less-than-20-ownership","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}