SBA loan basics
Short answer
Yes, SBA 7(a) loans are frequently used to finance the buyout of an existing business partner, allowing one owner to take full control.
Partner buyouts are an eligible use of SBA 7(a) loan proceeds. The loan can be used to purchase the ownership interest of an existing partner, provided the remaining owner(s) meet all SBA eligibility criteria and the business demonstrates sufficient cash flow to service the debt after the buyout. A formal business valuation is typically required.
Two partners own a business valued at $1 million. One partner wants to sell their 50% stake. An SBA 7(a) loan for $500,000 can be used by the remaining partner to buy out the exiting partner, subject to a business valuation and the remaining partner's eligibility.
Lenders will require a third-party business valuation to ensure the purchase price is fair and reasonable. They also rigorously assess the post-buyout cash flow of the business and the remaining owner's management capabilities and personal financial strength.
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
SBA 7(a) Loans Overview
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.
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