SBA 7(a) Loans for Buying a Business: What Texas Sellers Need to Know

By Josh Campbell, Business Broker · First Choice Business Brokers Dallas Metro · Updated October 2026

Quick answer: Most buyers of small businesses in DFW pay with an SBA 7(a) loan. The SBA guarantees part of the loan, so banks are willing to finance up to about 90% of the purchase price, usually over 10 years for the business itself (real estate can be financed longer), with a maximum loan of $5 million. For sellers, this means more qualified buyers and more cash at closing. It also means your financials have to hold up when a lender looks at them closely.

Why SBA financing matters to sellers

Without SBA loans, most individual buyers couldn't afford a business worth $500,000 to $5 million. With them, a buyer can put down about 10%, and the bank funds most of the rest. That makes the pool of buyers much larger, which supports your price.

How a typical SBA deal is structured

Piece	Typical share
Buyer cash injection	~10%
SBA 7(a) bank loan	~80–90%
Seller note (if needed)	0–10%+

Example: a business sells for $1,200,000. The buyer puts in $120,000, the bank lends $1,020,000, and the seller carries a $60,000 note. That leaves the seller with about $1,140,000 in cash at closing, before fees and taxes.

What the lender will look at

Cash flow coverage: the business has to cover its new loan payments with room to spare. For a business purchase, SBA rules now require a debt service coverage ratio of at least 1.25, measured on the business's actual historical earnings. Projections can't be used to meet it.
Verified financials: tax returns have to support the SDE you are claiming. Add-backs need documentation.
An independent valuation: the lender often orders its own. If it comes in below the price, the deal may need to be restructured.
A quality of earnings report on larger deals: for business purchases of about $3 million or more, the lender now commissions one.
The buyer's qualifications: credit, relevant experience and liquidity.
A transferable lease and the business's licenses.

Seller notes and standby rules

Lenders sometimes ask the seller to finance part of the price. The buyer must put in at least 10% of the total project cost, and for a first-time acquisition that minimum can't be waived. A seller note can cover up to half of that 10%, but only if it is on full standby for the life of the SBA loan, which means no principal or interest payments until the bank is repaid, often about ten years. A seller note that isn't counted toward the buyer's equity can be paid normally, subject to the lender's terms. These rules follow SBA SOP 50 10 8.1, which applies to loans approved on or after October 1, 2026. They change from time to time, so confirm the current rules with your lender.

Transition and seller involvement

In a full sale, SBA rules require the seller to give up ownership at closing. You can stay on to help with the transition as a consultant or employee for up to 24 months, up from 12 months under the older rules. Earnouts are generally not allowed in SBA deals.

Timeline

If the buyer's paperwork is ready, SBA financing usually adds 45 to 90 days from the signed LOI to closing. Using a Preferred Lender that handles a lot of SBA deals can make this faster.

How sellers can make SBA deals easier

File clean tax returns that match your profit-and-loss statements.
Document every add-back.
Get your landlord to agree early to assign or extend the lease.
Have 3 years of financials and a current year-to-date report ready.
Price the business at a level the cash flow actually supports.

Josh's take: I spent twenty years on the lending side before I ever sold a business, so here's what most sellers miss: the buyer isn't your only audience, the underwriter is. A deal that pencils at 1.25 debt coverage but only because you work every Saturday will get trimmed in credit committee. Hand the lender a clean story and a real transition plan, and SBA money stops being the hurdle and becomes the reason you got your price.

Frequently asked questions

Can a buyer purchase my business with an SBA loan and no money down?

No. The SBA requires the buyer to inject equity, typically about 10% for a change of ownership.

Will I get all cash at closing?

Often most of it. A small seller note is common, especially when the lender asks for one or the valuation comes in lower than the price.

Does an SBA loan slow the deal down?

It adds a few weeks of underwriting, but clean financials and an experienced SBA lender keep things moving.

What if my tax returns understate my profit?

Lenders go by the tax returns. Income that isn't reported generally can't be counted, which lowers the price you can support.