{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-buy-out-a-minority-partner-who-owns-less-than-20-of-the-busin","api_url":"https://dealroom.so/api/public/questions/can-i-use-an-sba-7-a-loan-to-buy-out-a-minority-partner-who-owns-less-than-20-of-the-busin","question":"Can I use an SBA 7(a) loan to buy out a minority partner who owns less than 20% of the business?","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, provided other eligibility criteria are met.","rule":"SBA 7(a) loans can finance partner buyouts, including those involving minority partners. The key is that the transaction results in a change of ownership where the acquiring owner(s) gain control of the business. An independent business valuation is typically required if the purchase price exceeds $500,000, or in situations involving related parties.","example":"A business has two owners, one with 80% and another with 20%. The 80% owner wishes to buy out the 20% partner. An SBA 7(a) loan can finance this buyout, provided the 80% owner meets eligibility and the business can support the debt.","what_lenders_check":"Lenders will ensure the buyout is legitimate, the valuation is fair, and the remaining owner has the management experience and financial capacity to operate the business post-acquisition. They will also verify all ownership percentages before and after the transaction.","required_facts":["Minority partner buyout","Change of ownership","Independent valuation","Buyer eligibility"],"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-partner-who-owns-less-than-20-of-the-busin","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."]}