Updates to the SBA Loan Program

lender profile

April 13, 2023

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

We often receive inquiries from people looking to do partial business acquisitions or to have a seller roll equity in an acquisition when using the SBA loan program. Historically that has not been allowed as the SBA has always required 100% of the ownership interest to change hands when the SBA is financing the acquisition. However, the SBA just announced yesterday the approval of a series of changes to the SBA Standard Operating Procedure ("SOP") which will allow partial changes in ownership going forward. This is a huge change as it will open up SBA financing to many more individuals and businesses that did not qualify before.

Also announced were some changes in affiliation rules as well as the elimination of the franchise directory, which should further open up more businesses and individuals for qualifying for SBA financing who may have been eliminated in the past.

Although the changes have been announced, they do not go into effect until May 11th. Because of that the updated SBA SOP has not been released yet. Once it is released on May 11th we should have a clearer picture on the changes and exactly what will qualify going forward. Just as a warning, many lenders might take a cautious approach on the front end to be sure they can digest and fully understand the changes. But going forward if you plan to look at transactions for a partial buy-out, it appears there is going to be an opportunity to do so using SBA financing going forward.

As always if you have financing questions you can reach us here or directly at redacted

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Reply by a professional
from Vanderbilt University in Austin, TX, USA
Thanks for tagging me ^redacted‌ - we've done a decent amount of publishing on this topic. We did an interview with an expert late last year where we discussed SBA changes (see the first 15 minutes): https://open.spotify.com/episode/1kcEAYpCYjhc1BizvnKHBH?si=MME4ZBgJQ4-Y2XkK9IPILw

We also published a piece 2 weeks ago about alternatives to SBA loan financing for SMB acquisitions: https://privatemarketlabs.com/non-sba-entrepreneurship-through-acquisition-debt-funding/

Finally, be on the lookout here on Searchfunder for a conversation with ^redacted‌next month once the changes are live!
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Reply by a lender
from Xavier University in Cincinnati, OH, USA
Thank you for the tag ^redacted‌. I know we've seen and heard many variations of what the new SOP may contain, and some of the changes sound like they could be very promising when structuring our deals. I think until the final version(s) are approved we are all in a holding pattern, but I think we are all as a group hoping for some great changes to be granted final approval. Looking forward to working together with everyone and seeing what the next Procedural Notice(s) contain!
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