Private credit for small business

October 30, 2025

by a searcher from Columbia University - Columbia Business School in Princeton, NJ, USA

Hi, I have a location in the food and beverage franchise space and the store manager is very competent. I own 100% of the business with zero debt, and I want her to be a 50/50 partner. However, she does not have the capital contribution to invest. Are there lenders or private credit partners out there or even SBA that can lend her the capital to become a partner? The business is worth $500K approximately.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

If doing a partial business acquisition using an SBA 7A loan, you could get a loan for $250,000. If there is enough equity on the balance sheet so the debt to net worth ratio is 9 to 1 or less, technically the SBA would not require a down payment. But we still typically see lenders require a minimum of 5% borrower equity. Under this scenario you would need to sign a personal guarantee for the full loan amount as well. It is possible. The biggest challenge would be to find a lender willing to do an SBA 7A business acquisition loan this small.

Reply by a professional
from The Johns Hopkins University in Basking Ridge, NJ 07920, USA

I assume that you have already considered this, but "seller" financing to a key employee can work. Many businesses (including law firms) allow you to "work-off" your buy-in via set-off.

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