SBA 7(a) Q&A
Short answer
An earn-out as part of a partner buyout can be included in an SBA 7(a) acquisition, but the earn-out portion cannot be financed by the SBA loan.
Earn-outs, which are contingent payments based on future business performance, are not eligible for SBA financing. The SBA loan will only cover the fixed portion of the purchase price. The earn-out must be clearly structured as a separate agreement between the buyer and seller, paid from future cash flow, and fully subordinated to the SBA loan.
A partner buyout is structured with a $500,000 fixed price and a $50,000 earn-out based on next year's revenue. The SBA 7(a) loan can finance the $500,000 fixed portion (subject to equity injection). The $50,000 earn-out cannot be part of the SBA loan and must be paid separately by the buyer, with its payment terms subordinated.
Insider move
Lenders ensure that the earn-out component is explicitly excluded from the SBA loan amount. They also require documentation confirming the earn-out is subordinated to the SBA loan, meaning no payments can be made on the earn-out if it jeopardizes the SBA loan repayment.
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 partner buyouts
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