Can you sell a business that still has an SBA loan?
Short answer
Yes, but you need the lender involved. You certified that you would not change ownership or sell assets outside the ordinary course without its written consent. The loan can be paid off at closing or assumed. Source: SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.8.b.
Yes, but you need the lender involved. Before disbursement, you certified that you would not change the ownership structure without the lender's prior written consent. The same certification covers selling assets outside the ordinary course (SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.8.b).
Ways it can be handled
- Payoff at closing. The buyer's financing pays off your SBA loan. On a 504 loan, you pay the full balance, unpaid interest, fees and any prepayment premium (13 CFR 120.940).
- Assumption. The buyer takes over the loan, with the needed consent.
- New SBA financing for the buyer. A 7(a) loan can fund the purchase under Appendix 15. In an Initial Acquisition, paying off existing business debt is part of the change of ownership, not a refinance (Appendix 15, Para. A.3.a).
In an Initial Acquisition, if the buyer uses your current lender, SBA does not treat that payoff as same-institution refinancing (Appendix 14, Para. A, Same Institution Debt).
Costs to check
- On a 7(a) loan of 15 years or more, an early payoff can trigger the subsidy recoupment fee (13 CFR 120.223).
- A 504 note sets its own prepayment premium.
Real estate
Lien instruments on 504 project real estate must contain a due-on-sale clause (Sec. C, Ch. 2, Para. C.3). Check your 7(a) documents for similar language.
Talk to the lender first
Raise the sale before you sign a letter of intent. Your guarantee stays in place unless it is released or the loan is paid off.
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.
Janover Capital LLC is not a lender and is not the SBA. The lender makes the credit decision. A lender or marketplace may pay us a referral fee if we connect you, at no cost to you. Advertiser disclosure.