SBA lender question

July 17, 2025

by a searcher from Boston University - Questrom School of Business in Boston, MA, USA

I'm currently working on an acquisition of my platform company that I'll be acquiring with self funding and investor funds. My goal is to continue acquisition activities and grow the platform. Ideally I'd like to leverage SBA funding to continue rather than take on additional investor dollars. Are there any restrictions I should be aware of where the SBA wouldn't lend in this situation? I'd love to chat with a couple of SBA lenders about my plan.

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

I would be happy to have a discussion and go over options for acquiring additional businesses in the future. I think the biggest issue you can run into is maximizing out your SBA exposure at $5 million. The second issue is timing for future acquisitions and how comfortable lenders will get. Happy to discuss in more detail here or directly at redacted

Reply by a searcher
from State University of New York (SUNY) in Buffalo, NY, USA

As others have noted the two limitations here are going to be the $5mm cap on SBA loan and a bank’s hesitance to fund add-ons quickly. As I understand it, the $5mm limit is per 3 digit NAICS prefix. So if you purchase a business with a different 3 digit NAICS prefix you have access to another $5mm in theory. Problem is that means the second business you buy probably won’t be a good fit with the first. Even if you’re under the limit, it does not guaranty your bank will want to lend for an add-on. They have likely seen people try to move too fast too quickly and blow themselves up. In my opinion, SBA loans are not a good vehicle for roll-ups with the current cap at $5mm. The best way to do it would be buy something with $1.5mm of EBITDA. Try to grow aggressively in first two years (20%+ each year) to get to $2mm then find a $1mm add-on and refinance to a more conventional lending option. If the SBA cap moves to $10mm as has been rumored then SBA debt could be a good financing strategy.

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