For SBA lenders
Short answer
If a seller remains as a paid consultant, the lender must ensure the arrangement is for a reasonable duration and compensation, does not constitute seller control, and the buyer assumes full management and operational control immediately.
SBA rules for change of ownership require the buyer to assume full control and management of the business. A seller remaining as a paid consultant is acceptable, but the arrangement must be limited in scope and duration (typically up to 12 months for training/transition) and the compensation must be reasonable and market-based, not contingent on business performance.
A buyer acquires a business and the seller agrees to stay on as a consultant for 6 months to assist with customer transitions at a fixed monthly fee. The lender reviews the consulting agreement to ensure the fee is reasonable, the term is limited, and the buyer has clear authority over all business operations from day one.
Insider move
The primary concern is preventing the seller from retaining de facto control, which undermines the 'change of ownership' principle. Lenders must scrutinize consulting agreements for excessive terms, performance-based compensation, or language that limits the buyer's authority, which could trigger an eligibility issue or affiliation concern.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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