{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-buy-out-a-minority-business-partner-who-owns-less-than-20","api_url":"https://dealroom.so/api/public/questions/can-i-use-an-sba-7-a-loan-to-buy-out-a-minority-business-partner-who-owns-less-than-20","question":"Can I use an SBA 7(a) loan to buy out a minority business partner who owns less than 20%?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, an SBA 7(a) loan can be used to buy out a minority business partner, regardless of their ownership percentage, as long as the buyout results in a complete change of ownership for the departing partner and meets all other eligibility requirements.","rule":"SBA 7(a) loans are eligible for change of ownership transactions, which include partner buyouts. The loan proceeds can be used to purchase the ownership interest of a departing partner. The departing partner cannot retain any ownership interest, and the transaction must be a complete buyout for that individual. The remaining owner(s) must meet all SBA eligibility criteria.","example":"A 75% owner wants to buy out their 25% partner for $300,000. An SBA 7(a) loan for $300,000 (plus working capital or fees) can be used for this purpose, assuming the business has sufficient cash flow to service the debt and the remaining owner meets all other SBA requirements.","what_lenders_check":"Lenders ensure the buyout is legitimate and results in a full divestment of the departing partner's interest. They review the purchase agreement, verify the remaining owner's eligibility, and confirm the business's post-buyout cash flow can support the new debt.","required_facts":["Minority partner buyout","Complete divestment","Remaining owner eligibility","Purchase agreement","Cash flow"],"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":"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"}],"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":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-buy-out-a-minority-business-partner-who-owns-less-than-20","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."]}