# Is SBA acquisition equity based on price or total project cost?

**Short answer:** On most deals it is based on total project cost, not the price alone. An Owner Buyout is the exception, where equity is based on the purchase price of the business. Source: SOP 50 10 8.1, App. 15, Para. C.2.a.

Canonical page: https://www.sbaexpress.loans/answers/sba-acquisition-equity-total-project-cost/
Last checked: 2026-11-08

On most deals, the equity percentage applies to total project cost. SOP 50 10 8.1, Appendix 15, Para. C.2.a, defines that as all costs required to become operational, whatever the source of funds. Lines of credit and 504 loans are excluded.

An Owner Buyout is different. Its equity is measured on the purchase price of the business, as shown in the purchase and sale agreement.

## The minimum by deal type

- Initial Acquisition: 10%, which cannot be reduced or eliminated.
- Business Expansion and Owner Buyout: the same minimum, but the lender may reduce or eliminate it. The borrower needs enough liquidity and no negative net worth.
- employee stock ownership plan (ESOP): no SBA equity requirement for a loan to an ESOP buying a controlling interest (at least 51%).
- Cooperative: 10%.

## A worked example

An Initial Acquisition has a price of $900,000 and $100,000 of other project costs. Total project cost is $1,000,000, so minimum equity is $100,000. On an Owner Buyout at the same price, the base would be $900,000.

Ask your lender how it builds the project budget, because that sets the base.

## Real estate in the deal

Real estate bought with the business carries the same requirement. In a separate loan, the lender allocates equity pro rata. A 504 loan follows its own equity rules instead.

## SBA Express

Express does not avoid this. Section B, Ch. 2, Para. A.2 applies the Appendix 15 equity requirements to Express and 7(a) Small changes of ownership.

## Sources

- [SOP 50 10 8.1, App. 15, Para. C.2.a (about pp. 374-376)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. B, Ch. 2, Para. A.2 (p. 125)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)