Can a buyer assume your SBA loan when you sell?
Short answer
Yes, with consent. A 504 loan may be assumed only with SBA's prior written approval (13 CFR 120.937). SOP 50 10 8.1 recognizes 7(a) assumptions and sends lenders to SOP 50 57 for the procedure. SBA does not require a new guaranty fee on a 7(a) assumption.
Yes, but not on your own. A buyer can take over an SBA loan only through the lender or Certified Development Company (CDC).
504 loans
13 CFR 120.937 says a 504 loan may be assumed with SBA's prior written approval.
7(a) loans
SOP 50 10 8.1, Sec. A, Ch. 4, Para. C.2.e (about p. 69) addresses assumption of a loan by another entity. It sends lenders to SOP 50 57 for the procedure. It also says SBA does not require a new guaranty feeA fee SBA charges on the guaranteed part of a loan. The lender pays it and may pass it to you. Full definition, and lien positions are often maintained.
What the forms show
- SBA Form 148 defines the note to include any assumption (para. 2).
- SBA Form 912 has a field naming the Applicant, Borrower or Assumptor.
The buyer must qualify
A new owner or required guarantor must meet the citizenship and residency rules in place at the time. See Information Notice 5000-877673, question 5.
The sources here do not give SBA's other assumption standards, because SOP 50 57 is not among them. Ask the lender what it will review.
Other ways to structure the deal
A buyer can instead finance the purchase with a new 7(a) loan. Paying off existing business debt in an Initial Acquisition is not refinancing under Appendix 14 (Appendix 15, Para. A.3.a).
Before you agree
Ask whether the lender will release you from your guarantee. An assumption does not end it by its terms (SBA Form 148, paras. 1 and 2).
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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