{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-percentage-of-a-1-million-business-acquisition-can-be-financed-by-an-sba-7-a-loan-if-","api_url":"https://dealroom.so/api/public/questions/what-percentage-of-a-1-million-business-acquisition-can-be-financed-by-an-sba-7-a-loan-if-","question":"What percentage of a $1 million business acquisition can be financed by an SBA 7(a) loan if a significant portion is goodwill?","topic":"Goodwill financing","audience":"borrower","bot_mode":"buyer","short_answer":"An SBA 7(a) loan can finance up to 90% of a business acquisition, including significant goodwill, provided the buyer contributes the minimum 10% equity.","rule":"The SBA 7(a) program allows for financing of goodwill and other intangible assets as part of a business acquisition. The maximum loan-to-value (LTV) is typically 90%, meaning the buyer must provide a minimum 10% equity injection. There isn't a separate, lower percentage cap specifically for goodwill, as long as the business's overall value (including goodwill) is supported by a qualified appraisal and its cash flow justifies the debt.","example":"A buyer acquires a software company for $1 million, where $700,000 is attributed to goodwill. An SBA 7(a) loan can finance $900,000 (90%) of the purchase, with the buyer providing $100,000 (10%) equity, given strong cash flow.","what_lenders_check":"Lenders focus on the business's ability to service the debt, especially when goodwill is a large component. They require a strong business valuation to justify the overall purchase price, ensuring the intangible assets are properly valued and the cash flow is sufficient.","required_facts":["Goodwill financing","Acquisition percentage","Minimum equity","Business valuation","Cash flow"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"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"}],"related_questions":[{"question":"Is it possible to finance a business with an SBA 7(a) loan where most of its value is intangible assets like customer lists and brand reputation?","url":"https://dealroom.so/sba-7a/questions/is-it-possible-to-finance-a-business-with-an-sba-7-a-loan-where-most-of-its-value-is-intan"},{"question":"How does the SBA assess the value of \"blue sky\" or intangible assets when underwriting a business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-assess-the-value-of-blue-sky-or-intangible-assets-when-underwriting-a-bus"},{"question":"Is a separate business valuation required for an SBA 7(a) acquisition loan?","url":"https://dealroom.so/sba-7a/questions/is-a-separate-business-valuation-required-for-an-sba-7-a-acquisition-loan"},{"question":"Does financing a substantial amount of goodwill increase the required collateral for an SBA loan?","url":"https://dealroom.so/sba-7a/questions/does-financing-a-substantial-amount-of-goodwill-increase-the-required-collateral-for-an-sb"},{"question":"How do lenders determine the value of goodwill during the appraisal process for an SBA acquisition loan?","url":"https://dealroom.so/sba-7a/questions/how-do-lenders-determine-the-value-of-goodwill-during-the-appraisal-process-for-an-sba-acq"},{"question":"Is it possible for an SBA 7(a) loan to finance a business acquisition where goodwill makes up 80% of the $700,000 purchase price?","url":"https://dealroom.so/sba-7a/questions/is-it-possible-for-an-sba-7-a-loan-to-finance-a-business-acquisition-where-goodwill-makes-"}],"related_terms":[{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Aggregate SBA 7(a) Loan Eligibility","url":"https://dealroom.so/glossary/aggregate-sba-7-a-loan-eligibility"},{"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":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"}],"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/what-percentage-of-a-1-million-business-acquisition-can-be-financed-by-an-sba-7-a-loan-if-","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."]}