SBA 7(a) Q&A
Short answer
The seller must be divesting their ownership completely, cannot remain an officer or director, and typically cannot remain as a consultant for more than 12 months.
The SBA requires a complete change of ownership. The seller must not retain any control or significant influence over the business. Any consulting agreement must be for a limited duration and market-rate compensation, ensuring a clean break for the buyer.
In a $1,000,000 acquisition, the seller sells 100% of their equity. They can stay on as a consultant for a maximum of 12 months at a reasonable salary to facilitate a smooth transition, but they cannot hold any board positions.
Insider move
Lenders meticulously review the purchase agreement and any related consulting or non-compete agreements to ensure the seller's role and compensation comply with SBA rules for a change of ownership. They verify the seller is truly divesting control.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. 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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