SBA loan basics
Short answer
Yes, SBA 7(a) loans are commonly used to finance the purchase of an existing business from an unrelated third party, which is a standard and eligible use of funds.
Acquisition of an existing eligible small business is a primary purpose of the 7(a) program. The transaction must be an arm's length transaction, meaning the buyer and seller have no existing relationship that would influence the fairness of the deal terms.
A buyer identifies a profitable widget manufacturing company listed by a business broker. An SBA 7(a) loan can finance the purchase price, working capital, and eligible closing costs for this arm's length transaction.
Insider move
Lenders conduct thorough due diligence on the acquired business and the transaction terms to ensure it's a sound investment. They verify the arm's length nature of the deal and require an independent valuation to support the purchase price.
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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