SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to finance the buyout of an existing business partner's share, allowing the remaining owner to gain full or majority control.
Partner buyouts are an eligible use of 7(a) loan proceeds. The loan can be used to purchase the ownership interest of an existing partner or shareholder. The SBA requires a fair market valuation of the business to ensure the buyout price is reasonable and that the business can support the additional debt.
Two partners own a manufacturing business 50/50. One partner wants to retire. The remaining partner can use an SBA 7(a) loan for $750,000 to buy out the retiring partner's share, assuming the business valuation supports the price and the business can service the debt.
Insider move
Lenders require an independent business valuation to justify the buyout price. They also assess the remaining owner's management experience and the business's ability to generate sufficient cash flow to cover the new debt service after the buyout.
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 2026-06-13. 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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