SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to buy out an existing business partner, provided the transaction results in an eligible change of ownership and meets all other SBA requirements.
The loan must facilitate a complete change of control where the outgoing partner exits the business, or a partial change where the remaining partners gain full control. The valuation of the partner's share must be reasonable, and the business must have sufficient cash flow to support the new debt.
Two partners each own 50% of a business. One partner wants to retire, and the other wants to buy their share. An SBA 7(a) loan for $750,000 can finance the purchase of the retiring partner's 50% stake, making the remaining partner sole owner.
Insider move
Lenders verify that the buyout results in a legitimate change of ownership and that the valuation of the equity being purchased is sound. They also scrutinize the post-transaction cash flow to ensure the business can service 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
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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