{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-where-significant-revenue-comes-from-go","api_url":"https://dealroom.so/api/public/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-where-significant-revenue-comes-from-go","question":"Can an SBA 7(a) loan be used to purchase a business where significant revenue comes from government contracts?","topic":"Eligibility & business type","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, an SBA 7(a) loan can be used to acquire a business with significant government contracts, provided the contracts are transferable.","rule":"Businesses with government contracts are generally eligible for SBA 7(a) loans, assuming they meet all other criteria. The key is ensuring that the contracts can be legally transferred to the new owner, or that the new owner can qualify to continue the contracts, demonstrating stable future revenue for the business.","example":"A buyer acquires an IT services firm that derives 70% of its $2,000,000 annual revenue from long-term contracts with federal agencies. The SBA loan would be approved if the new owner can successfully assume these contracts or re-qualify.","what_lenders_check":"Lenders will conduct extensive due diligence on the government contracts, including their transferability, duration, and the buyer's ability to fulfill them. They will assess the risk of contract loss during or after the ownership transition, which could severely impact repayment capacity.","required_facts":["Government contracts","Significant revenue","Contract transferability","Buyer qualification","Revenue stability"],"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":"Can an SBA 7(a) loan be used to purchase a business that is structured as a co-op?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-that-is-structured-as-a-co-op"},{"question":"Can I acquire a business that operates primarily online with no physical storefront?","url":"https://dealroom.so/sba-7a/questions/can-i-acquire-a-business-that-operates-primarily-online-with-no-physical-storefront"},{"question":"Are there specific types of businesses or industries that are ineligible for SBA 7(a) loans?","url":"https://dealroom.so/sba-7a/questions/are-there-specific-types-of-businesses-or-industries-that-are-ineligible-for-sba-7-a-loans"},{"question":"If my business is home-based, does that affect its eligibility for an SBA 7(a) acquisition loan?","url":"https://dealroom.so/sba-7a/questions/if-my-business-is-home-based-does-that-affect-its-eligibility-for-an-sba-7-a-acquisition-l"},{"question":"Is a business run entirely from my home eligible for an SBA 7(a) loan?","url":"https://dealroom.so/sba-7a/questions/is-a-business-run-entirely-from-my-home-eligible-for-an-sba-7-a-loan"},{"question":"Does my business's industry affect its eligibility for an SBA 7(a) loan?","url":"https://dealroom.so/sba-7a/questions/does-my-business-s-industry-affect-its-eligibility-for-an-sba-7-a-loan"}],"related_terms":[{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"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"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"Lease with an option to purchase","url":"https://dealroom.so/glossary/lease-with-an-option-to-purchase"}],"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-purchase-a-business-where-significant-revenue-comes-from-go","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."]}