SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to buy out a retiring business partner, facilitating a smooth ownership transition while retaining the business's continuity.
SBA 7(a) loans are often utilized for 'change of ownership' transactions, including partner buyouts. The loan can finance the purchase of an existing owner's equity, especially if that owner is retiring. The purchase price must be justified by an independent business valuation.
Two partners own a consulting firm. One partner wishes to retire and sell their 50% stake for $400,000. The remaining partner can secure an SBA 7(a) loan for $400,000 (plus working capital and fees) to purchase the retiring partner's shares.
Insider move
Lenders require a comprehensive business valuation to justify the purchase price. They also ensure the remaining owner has the management expertise and the business has the cash flow to support the new debt and continue successful operations.
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
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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