SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to finance the buyout of an existing business partner, provided the remaining owner(s) will own 100% of the business or maintain a controlling interest.
Partner buyouts are an eligible use of 7(a) loan proceeds, facilitating the transition of ownership. The loan must result in a single owner or a defined group of owners acquiring 100% of the business, or at least a controlling interest. The valuation of the departing partner's equity must be reasonable and supported by a business valuation.
Two partners own a business 50/50. One partner wants to retire. The remaining partner can use an SBA 7(a) loan to buy out the departing partner's 50% stake, becoming the sole owner of the business.
Insider move
Lenders require a formal business valuation to ensure the buyout price is fair and reasonable. They also verify that the remaining owner has the experience and financial capacity to manage the business independently and repay the increased debt.
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 what it can be used for
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