SBA loan basics
Short answer
Yes, SBA 7(a) loans are commonly used to finance the purchase of an existing business, including assets, inventory, and goodwill, as well as providing working capital for the new owner.
Acquiring an existing business is one of the most frequent uses of SBA 7(a) loans. The loan can cover the purchase price of the business, including tangible assets, intangible assets (like goodwill), and often includes a component for working capital to ensure a smooth transition and cover initial operating expenses. A business valuation is typically required to ensure the purchase price is reasonable.
A new entrepreneur wants to buy an established plumbing business for $750,000. An SBA 7(a) loan can cover the majority of the purchase price, including trucks, tools, customer lists (goodwill), and provide an additional $50,000 for working capital. The buyer would typically need to contribute a down payment of 10-25%.
Insider move
Lenders will assess the business's historical financial performance, the buyer's relevant experience, the reasonableness of the purchase price (often requiring an independent valuation), and the transition plan to ensure the business's continued success post-acquisition.
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 2026-06-14. 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.
More on what it can be used for
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