SBA 7(a) Q&A
Short answer
No, generally an SBA 7(a) loan cannot be used for a company to redeem its own shares from a departing partner.
SBA policy typically prohibits the use of loan proceeds for stock redemptions by the business itself. The loan must be made to an eligible borrower (the acquiring individual or entity) for an eligible purpose, which usually means the acquiring individual directly purchases the shares from the departing partner (a cross-purchase).
Instead of ABC LLC buying back shares from Partner A using an SBA loan, Partner B (the remaining owner) would personally apply for the SBA loan to purchase Partner A's shares directly from Partner A.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-15 · SBA sources checked through 2026-06-15. DealRoom analysis of the current SBA 7(a) rulebook for change-of-ownership / partner buyouts. 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 partner & owner buyout
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This page answers “Can the company itself redeem the departing partner's shares with an SBA loan?” for SBA 7(a) business buyers — a short answer, the detail, and official sources — from DealRoom.so SBA Intelligence. It is general information, not legal, tax, or financial advice, and DealRoom is not a lender.
Source: DealRoom.so SBA Intelligence, based on public SBA, lender, franchise, FDIC, and related records. DealRoom is not a lender and does not guarantee financing.
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