SBA 7(a) Q&A
Short answer
An asset purchase involves buying specific business assets, while a stock purchase involves buying the departing partner's ownership shares in the existing legal entity.
In a stock purchase, the buyer acquires the seller's equity, inheriting the existing business entity with its liabilities and assets. In an asset purchase, the buyer only purchases selected assets, creating a new legal entity or integrating them into an existing one, typically leaving liabilities with the seller's original entity.
In a stock purchase, Partner A buys Partner B's shares in 'ABC Corp', and ABC Corp continues as the same legal entity. In an asset purchase, Partner A might form 'NewCo LLC' and NewCo LLC buys the equipment, customer list, and goodwill from 'ABC Corp', leaving old liabilities with ABC Corp (Partner B's entity).
Insider move
Lenders prefer asset purchases due to cleaner liability transfer, but stock purchases are common in partner buyouts. They conduct thorough due diligence on liabilities and advise on proper structuring to mitigate risks inherent in either approach.
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.
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