SBA 7(a) Q&A
Short answer
An acquisition involves buying an existing operating business, typically with a track record. A 'new business' (startup) has no operating history or is a completely new venture, often requiring a stronger business plan and higher equity injection.
The SBA treats acquisitions and new businesses differently in terms of underwriting. Acquisitions benefit from historical financial data, which helps lenders assess repayment ability. New businesses lack this history, requiring a more robust business plan, detailed projections, and typically a higher equity injection to demonstrate viability and borrower commitment.
A buyer purchasing a five-year-old auto repair shop is an 'acquisition.' An SBA loan relies on the shop's past financials. If the buyer instead wanted to open a brand-new, never-before-operated auto repair shop, that's a 'new business' startup, requiring much more detailed projections and a higher equity contribution, often 25-30%.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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