For SBA lenders
Short answer
Lenders verify experience by assessing transferable skills from prior management roles, educational background, mentorship plans, or retaining key employees from the acquired business.
While direct industry experience is preferred, SBA recognizes that borrowers may have transferable skills. Lenders should document how the borrower's prior experience (e.g., managing a large team in a different industry, strong financial acumen) is relevant. Mitigation factors like a robust business plan, a formal mentorship arrangement, or the retention of key management/employees from the acquired business can strengthen the application and demonstrate prudence.
A borrower with 20 years of retail management experience but no restaurant experience seeks to acquire a restaurant. The lender notes the borrower's strong P&L management skills, the seller's 6-month consulting agreement, and the retention of the existing head chef in their credit memo.
Insider move
Lenders must thoroughly document how a borrower's experience, or mitigation strategies, supports the success of the acquired business. Insufficient management experience is a common reason for loan failure and can lead to guaranty repairs if not prudently underwritten.
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.
More on change-of-ownership underwriting
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day