SBA loan basics
Short answer
Yes, SBA 7(a) loans can be used to buy out a departing business partner, allowing the remaining owner(s) to retain full control of the business.
An eligible use of 7(a) loan proceeds is to finance a change of ownership, including the buyout of a partner's interest. The transaction must result in the continuing operation of the business, and the exiting partner cannot remain involved in the business's management or retain an equity stake.
A 50/50 partnership, 'Creative Designs LLC,' has one partner wanting to retire. The remaining partner can secure an SBA 7(a) loan for $250,000 to purchase the departing partner's 50% equity stake, allowing the business to continue under sole ownership.
Insider move
Lenders require a business valuation to ensure the buyout price is fair and reasonable. They also verify that the departing partner has no ongoing financial interest or management role after the transaction to prevent affiliation issues.
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.
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