What money costs
Roughly four out of five buyers in this market plan to use an SBA loan. That makes the SBA's rulebook the invisible frame around most small business sales.
Roughly four out of five buyers in this market plan to use an SBA loan. That makes the SBA's rulebook the invisible frame around most small business sales. What a buyer can borrow, over how many years, and how much of their own cash they must bring sets the ceiling on what anyone can offer you.
So these are not only the buyer's numbers. Whether your business fits what a lender will fund, and whether your price fits inside it, decides how many buyers are able to make you an offer at all.
One thing to read carefully, because it is the most common misreading in this whole subject. The SBA caps below are spreads over a base rate, not the rate itself. A cap of base rate plus three percent means a lender may add three points on top of prime. It does not mean the loan costs three percent.
37 figures · 6 sources · last reviewed 2026-09-10
SBA 7(a), the terms
What's the maximum I can borrow on an SBA 7(a) loan?$5,000,000
Maximum SBA-guaranteed 7(a) loan amount is $5 million
Most 7(a) loans have a maximum loan amount of $5 million
Excludes SBA Express and Export Express which max at $500,000
What is the most a lender can charge on an SBA 7(a) loan up to $50,000?base rate + 6.5%
SBA 7(a) loans up to $50,000 cannot exceed base rate plus 6.5%
$50,000 or less: cannot exceed base rate + 6.5%
Rate is a spread over prime, not the rate itself.
What is the most a lender can charge on an SBA 7(a) loan of $50,001 to $250,000?base rate + 6.0%
SBA 7(a) loans $50,001-$250,000 cannot exceed base rate plus 6.0%
$50,000 or less: cannot exceed base rate + 6.5% $50,001 – $250,000: cannot exceed base rate + 6.0% $250,001 – $350,000: cannot exceed base rate + 4.5%
Rate is a spread over prime, not the rate itself.
What is the most a lender can charge on an SBA 7(a) loan of $250,001 to $350,000?base rate + 4.5%
SBA 7(a) loans $250,001-$350,000 cannot exceed base rate plus 4.5%
$250,001 – $350,000: cannot exceed base rate + 4.5%
Rate is a spread over prime, not the rate itself.
What is the most a lender can charge on an SBA 7(a) loan over $350,000?base rate + 3.0%
SBA 7(a) loans over $350,000 cannot exceed base rate plus 3.0%
$350,001 and greater: cannot exceed base rate + 3.0%
Rate is a spread over prime, not the rate itself.
How long can I take to repay an SBA loan for equipment?10 years
SBA 7(a) loan term for non-real estate cannot exceed 10 years
10 years or less, unless financing or refinancing real estate or equipment with a useful life exceeding 10 years
Real estate and equipment financing can extend to 25 years including extensions
Can I use an SBA loan to buy real estate?25 years
SBA 7(a) loan term for real estate can extend to 25 years
25 years including extensions for real estate
Applies only to real estate financing; non-real estate limited to 10 years
How much does the SBA back my loan if it's small?85%
SBA guarantees 85% of 7(a) loans of $150,000 or less
SBA guarantees up to 85% of loans of $150,000 or less
Different percentages apply to Express loans (50%) and Export/International Trade loans (90%)
How much does the SBA back larger loans?75%
SBA guarantees 75% of 7(a) loans above $150,000
For most 7(a) loan programs, SBA guarantees up to 85% of loans of $150,000 or less, and up to 75% of loans above $150,000.
For standard 7(a) loans. Express and Export loans carry different guaranty percentages.
What the buyer has to put in
How much of my own money do I need to put into an SBA deal?10%
10% equity injection is required for complete changes of ownership in 7(a) loans
A 10% equity injection is required for complete changes of ownership
Rules updated August 10, 2023; does not apply to partial changes of ownership or existing owner transitions
Do I always have to put cash into an SBA acquisition?not required
Equity injection is not required for 7(a) loans except for changes in ownership
Except for changes in ownership, an equity injection is not required, lenders can follow their policies for similarly situated private sector loans
This is the August 2023 updated rule; prior rules required equity injection for start-ups
Did the SBA update residency requirements recently?February 2026
7(a) loan program updates on citizenship and residency requirements occurred February 2026
SBA Lender Connect Call – February 11, 2026, (topics include: updates to citizenship and residency requirements, 7(a) Small loan underwriting and Working Capital Pilot (WCP) program updates)
The SBA lists the topics covered. The detailed rules sit in lender training material rather than in the announcement.
When do the latest SBA rule changes take effect?October 1, 2026
SOP 50 10 8.1 changes to 7(a) loan program are effective October 1, 2026
SOP 50 10 8.1: What's Changing for the 7(a) Loan Program – effective October 1, 2026 for the 7(a) Loan Program
The effective date is firm. The individual policy changes are set out in SOP 50 10 8.1 rather than in this notice.
Who actually gets approved
How many business owners are trying to borrow money?60%
Share of firms applying for financing in the 12 months leading up to the survey
Sixty percent of firms applied for financing in the 12 months leading up to the survey.
This includes all forms of financing; a subset applied for loans/lines of credit specifically
Are most owners applying for traditional loans or merchant cash advances?38%
Share of firms applying specifically for a loan, line of credit, or merchant cash advance
Thirty-eight percent of firms applied for a loan, line of credit, or merchant cash advance in the prior 12 months, nearly unchanged from the 2024 survey.
This is a subset of all financing applications and remained nearly unchanged from 2024
How many owners get the full amount of financing they ask for?42%
Share of financing applicants who received the full amount of financing they sought
Forty-two percent of applicants received the full amount of financing they sought, 36% received some or most, and 22% received none.
This includes all forms of financing; 22% received none of the requested amount
What percentage of financing requests get partially approved?36%
Share of financing applicants who received some or most of the financing they sought
Forty-two percent of applicants received the full amount of financing they sought, 36% received some or most, and 22% received none.
This represents partial approval; combined with full approval is 78% receiving at least some amount
What percentage of financing requests get rejected?22%
Share of financing applicants who received none of the financing they sought
Forty-two percent of applicants received the full amount of financing they sought, 36% received some or most, and 22% received none.
This represents complete denial of requested financing
Are smaller banks more likely to approve financing than big banks?57%
Approval rate for firms seeking financing at small banks
Applicants that sought financing at small banks were more likely to be fully approved (57%) than those that sought financing from other lenders.
Full approval rate; small banks had higher approval rates than other lender types
Are businesses turning to online lenders instead of banks?29%
Share of financing applicants seeking online fintech lenders in 2025
The share of applicants that sought financing at online fintech lenders has increased over the last five years, from 17% in the 2020 survey to 29% in the 2025 survey.
This represents growth from 17% in 2020; reflects increasing use of fintech lenders
What owners borrow, and what it costs
Why do businesses need to borrow money?56%
Most common reasons firms sought financing: meet operating expenses
The most common reasons firms sought financing were to meet operating expenses (56%) or to pursue an expansion or new opportunity (46%).
Multiple reasons allowed; expansion cited by 46% of applicants
How many business owners carry no debt?31%
Share of firms with no outstanding debt
The share of firms with no outstanding debt (31%) has grown moderately since the 2020 survey (21%), returning to prepandemic levels.
This has increased from 21% in 2020, returning to prepandemic levels
Do most business owners borrow regularly?86%
Share of firms that use financing on a regular basis
Eighty-six percent of firms use financing on a regular basis, with the most common products being credit cards and loans.
Most common products are credit cards and loans
What interest rates are owners paying on short-term debt?7.5%
Average interest rate paid on short-maturity loans was 7.5% in August
The average interest rate paid on short-maturity loans was 7.5% in August, down 0.4 points from July.
Down from 7.9% in July
How many owners use financing regularly?25%
25% of all small business owners reported borrowing regularly in August
Twenty-five percent of all owners reported borrowing regularly, down 2 points from July, and remaining below the historical average of 34%.
Below historical average of 34%
What you sign personally
Do owners typically put their personal assets on the line for business debt?59%
Share of firms with debt that used personal guarantee to secure debt
Of firms that have debt, 59% used a personal guarantee to secure their debt, while 51% used business assets.
Multiple methods allowed; 51% also used business assets
Do owners typically put business assets up as collateral?51%
Share of firms with debt that used business assets to secure debt
Of firms that have debt, 59% used a personal guarantee to secure their debt, while 51% used business assets.
Multiple methods allowed; 59% also used personal guarantees
Seller financing
Does the buyer's inability to get financing kill many deals?10.7%
Financing constraints account for smaller but meaningful share of broken LOIs
Financing constraints were cited in 10.7% of cases, driven by shifting capital availability or investor hesitation.
Financing-related broken LOIs declined materially from 21.3% in 2023 to 10.7% in 2025
Do most buyers plan to use SBA financing?78%
Buyers expect to use SBA financing
Nearly eight in ten buyers (78%) surveyed said they expect to use SBA financing to complete an acquisition
SBA financing remains backbone of small business acquisition market
Are buyers expecting me to finance part of the sale?90%
Buyers expect seller financing as part of acquisition strategy
While 90% of buyers expect seller financing to be part of their acquisition strategy
How many sellers are willing to finance part of the sale?29%
Owners plan to offer seller financing
only 29% of business owners plan to offer it
Greatest disconnect in today's market between buyer expectations and owner plans
Are most sellers refusing to carry seller financing?Almost half (approximately 47-49%)
Sellers will not provide seller financing
Almost half of sellers say they will not provide seller financing at all
How many sellers haven't decided on seller financing?23%
Sellers remain undecided on seller financing
another 23% remain undecided
What equity expects to earn
What returns do mezzanine investors expect?16.0%
Mezzanine fund median expected return 16.0% annually
Expected return % 15.0% 16.0% 18.0%
These are fund targets, not realised returns. The range runs 15.0% to 18.0%.
What returns do private equity investors target?25% IRR
Private equity fund median targeted return 25% IRR
the median vintage year was 2024, with a median targeted return of 25% IRR and median expected return of 20% IRR, reflecting the demanding return thresholds embedded in PE fund mandates
Targeted return, which sits above what the same funds expect to realise.
What returns do private equity investors actually expect to realize?20% IRR
Private equity fund median expected return 20% IRR
the median vintage year was 2024, with a median targeted return of 25% IRR and median expected return of 20% IRR
Expected return, against a 25% target. The gap between the two is the point.
How do deal professionals weight different EBITDA calculations?recast 33%, unadjusted 30%, cash flow 20%
EBITDA multiple weighting: recast 33%, unadjusted 30%, cash flow 20%
When weighting multiple-based methods, recast EBITDA multiples received the highest average weight (33%), followed by unadjusted EBITDA multiples (30%) and cash flow multiples (20%). The emphasis on recast EBITDA reflects PE's focus on normalized earnings power as the primary valuation anchor.
Weighted importance across multiple methods. PE preference for recast EBITDA emphasizes normalized earnings.
The gap worth sitting with
Ninety percent of buyers expect the seller to finance part of the sale. Twenty-nine percent of sellers say they are willing to. That gap is not a detail, it is the reason a large number of otherwise sound deals never reach a closing table, and it is the single most useful number on this page.
Seller financing is usually read as a concession. In practice it is priced. A seller who will carry paper is choosing between a lower cash price now and a higher total price paid over time, with the risk of collection attached. Deciding that in advance, rather than in the fourth week of a negotiation, is worth more than almost any other piece of preparation.
The approval figures deserve the same flat reading. Under half of owners who ask for financing get the full amount. That is not a market in distress; it is the normal distribution of who is ready to borrow and who is not. What separates the two is almost always documentation quality rather than the business itself.
What this page does not cover is what the money is being used to buy. Prices and multiples are on what businesses sell for, and the mechanics of getting from a letter of intent to a closing are on how deals close.
Sources on this page
- Axial
- BizBuySell Insight Report
- Federal Reserve Small Business Credit Survey
- NFIB
- Pepperdine Private Capital Markets Report
- U.S. Small Business Administration
Reported as published by the sources named. Not investment, legal, tax or valuation advice.