Buying a Trades Business Without Licensure - How to Navigate SBA Process & Mitigate Key Man Risk?

March 17, 2026

by a searcher from University of North Carolina at Chapel Hill in United States

I know this topic has been discussed extensively on this platform and elsewhere, but I don't think I've ever come across a clear, comprehensive answer. Also, based on conversations I've had with SBA lenders, it feels like the market has shifted towards a more conservative stance on this issue in recent months (for understandable reasons). For context, I am conducting a self-funded search, and I plan to target the three staple trades (HVAC, plumbing, and electrical), but I am not licensed. My professional background is in finance, but I grew up in a blue-collar environment and was raised by a family member who ran a small HVAC business, so these industries generally offer me a) the best cultural fit, and b) the financial profile that I am looking for (in terms of business model, revenue quality, and competitive landscape). My questions are: 1) How common is it, in today's environment, for the SBA to provide financing to buyers of trades businesses who do not hold the required licensing? Is it common or is it rare? I'm trying to get a sense of whether or not I'm fighting an uphill battle with a limited chance of success, or if success is likely (for the right deal, obviously), so long as I navigate the obstacle of ensuring that I have access to a licensed professional post-close. 2) What is the most effective, practical way for buyers of these businesses who do not have the required licensing to a) predictably make it through the SBA financing process and b) mitigate key man risk? From what I understand, most SBA lenders would like to see the license holder be a guarantor in an ideal world, but I just don't think this approach is practical (correct me if I'm wrong). Has anyone actually ever seen sellers / license holders agree to being a guarantor? 3) Am I wasting my time looking at these businesses without a license? I'd hate to put significant time and energy into focusing on these industries, only to have a good deal fall apart due to my inability to get through the SBA process.

Reply by a lender
from California State University, Sacramento in Seattle, WA, USA

Some potential solutions subject to specifics with jurisdictional requirements which vary state to state: Employee with the license with some amount of ownership w an employment agreement. + a second employee with the license and employment agreement so you’re not held hostage by one person. Maybe an RMO/RME might also work as the second license holder. Generally you can’t use the seller’s license as they can only stay on for up to one year as a consultant or 1099 not as an employee with a 100% buyout per SBA rule on seller post close role. Having someone from the industry with some ownership that has the license also helpful. What’s your ability yo get the license down the road? Talk with Lenders early on with the specific deal in-hand and the specific plan. redacted Happy to chat directly!

Reply by a searcher
from Texas A&M University in Heath, TX, USA

I'm working through similar challenges myself as I am not licensed and conducting a similar search. For the right deal, an SBA lender will work through this but you must be up front and be prepared to show your plan. I would also be thinking about the legal side as an operator in the field of choice.

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