searchfunder access to SBA 7A program

June 03, 2025

by an intermediary from Oregon State University in Clackamas, OR, USA

Hello all. What impact will the recent SBA changes have on the searchfunder model?

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

There are quite a few. I am going to post a PDF we created that talks about the changes shortly.

Reply by an intermediary
in Kansas City, KS, USA

Here are some highlights of the good, the bad, and the ugly: First, the good news: 1. High rollers, rejoice! The personal resource test is gone, so your net worth and liquidity won't disqualify you anymore. Lenders can now look at your global cash flow, including spousal and affiliate income. This opens doors for well-heeled buyers who were previously shut out. 2. CPA-prepared financials are now accepted when tax returns aren't cutting it. This is big for carveouts, newcos, and accrual-based accounting scenarios. More flexibility in financial documentation is always a win. 3. Smaller deals just got faster. For loans up to $500K (up from $350K), if you hit the right credit score, you can skip full underwriting. Time is money! Now, let's rip off the band-aid and talk about the bad and the ugly changes: 1. The bad: Partial buy-outs? Basically dead. If you're buying less than 100%, it's gotta be a stock purchase, and EVERYONE has to personally guarantee. This sucks. No more “up to 19% keeps you off the loan” retained-equity scenarios 2. The ugly: Those handy 2-year standby notes for seller financing? Gone. This is the biggest OUCH from the latest update.. Now, to count toward equity injection, seller notes need to be full standby for the entire loan life. YIKES! And they can only cover up to 50% of buyers injection. This is a big blow to deal stack flexibility. 3. U.S. citizens and green card holders only, folks. Even 1% ownership by someone who doesn't qualify will tank your deal. This closes the door on a lot of potential buyers. (I actually covered this in a previous post, but it's been formalized with this latest update) So, what's the bottom line? These changes are going to make SBA-financed acquisitions more challenging for many searchers. The flexibility we've enjoyed the past couple of years is being dialed back, and deal structures will need to adapt. But don't lose hope! There are still opportunities out there. You'll just need to be more creative, have more cash on hand, and possibly look at different types of businesses or financing structures.

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