Buying a business with an SBA Express loan
Short answer
Yes. An SBA Express loan can buy a business, up to $500,000. SBA's change of ownership rules still apply: at least 10% equity on most deals and debt service coverage of 1.25:1 (SOP 50 10 8.1, App. 15). It must be a term loan, not a line of credit.
- Most an SBA Express loan can lend
- $500,000
- Minimum equity on most deals
- 10%
- Debt service coverage on most deals
- 1.25:1
- SBA Express purchase loans since FY2024
- 2,608
What SBA Express can do for a buyer
An SBA Express loan can finance a change of ownership, subject to Appendix 15 of the SOP (SOP 50 10 8.1, Sec. B, Ch. 2, Para. A.2). The most it can lend is $500,000, counting your other SBA Express balances and those of your affiliates (Para. B.1). It must be a term loan: SBA does not allow a change of ownership to be financed with a revolving line (Sec. A, Ch. 2, Para. A).
Appendix 15 sorts every deal into one of four categories: Initial Acquisition, Business Expansion, Owner Buyout, or ESOP and Cooperative. Most purchases by a new buyer are Initial Acquisitions. The small business must be the borrower or a co-borrower. The lender must show you can run the business and repay the loan from its cash flow (App. 15, introduction and Para. A.1).
SBA Express relaxes only two of those rules, valuation and the collateralProperty a lender can take and sell if a loan is not repaid. test. See exactly what changes.
The rules that decide the deal
| Rule | What it means for you |
|---|---|
| Equity you put in | Initial Acquisition: 10%, which cannot be reduced or eliminated. Other deals: 10%, which the lender may reduce or eliminate for a Business Expansion or Owner Buyout if the borrower has enough liquidity and no negative net worth. SBA Express loans follow these rules, not the lender's usual discretion on equity (App. 15, Para. C.2.a). |
| Seller note as equity | Counts only if it is on full standby for the term of the 7(a) loan, with no payments of principal or interest. Seller debt, standby debt and minority equity together can cover no more than half of the required equity injection (App. 15, Para. C.2.a). |
| Debt service coverage | Initial Acquisition and Owner Buyout: 1.25:1. Business Expansion: 1.15:1. SBA Express gets no lower standard (App. 15, Para. C.2.b; Sec. B, Ch. 2, Para. A.2.b). |
| Valuation | The lender may do its own valuation when the Business Purchase Price is $350,000 or less, unless buyer and seller have a close relationship (Sec. B, Ch. 2, Para. A.2.a; App. 15, Para. C.1). Above that, the lender needs an independent valuation. |
| Term | 10 years of amortization, with only the real estate portion allowed up to 25 years on a blended basis (App. 15, Para. B.1). |
| Collateral | The loan must meet Appendix 15's fully secured test, but the lender need not count other commercial real estate you own (Sec. B, Ch. 2, Para. A.2.c). |
| Seller staying on | On an Initial Acquisition or Business Expansion, the seller can stay only as a consultant, for up to 24 months (App. 15, Para. A.9). |
A short example. Suppose the price is $300,000 and closing costs are $10,000, so total project cost is $310,000. On an Initial Acquisition the 10% minimum is $31,000, measured on total project cost. A seller note on full standby could supply at most half of that, $15,500. The rest must come from cash you did not borrow, which can include a gift, or from other sources SBA allows (App. 15, Para. C.2.a). If you pay more than the valuation supports, the difference must also be equity (App. 15, Para. C.1.a).
Test your deal with the debt service coverage calculator. Read how much equity a purchase needs and how a seller note can count.
When SBA Express fits, and when it does not
Choose by deal size first.
- Up to $500,000. SBA Express can work, but only a lender with SBA Express authority can make one. SBA guarantees only 50%, so the lender keeps more of the risk. Willingness to make these loans varies by lender.
- Above that. A Standard 7(a) loan goes up to $5,000,000. The guaranty is 85% on loans of $150,000 or less and 75% on larger loans. Most business purchases in SBA's file are in this range.
- With a building. Real estate must be a separate loan or a blended term (App. 15, Para. A.10.e). A 504 and a 7(a) can be paired for a business and its building.
See how the programs compare on the SBA programs page, and read the full guide to financing a purchase.
What SBA's file shows about business purchases
59% of those 16,850 loans were larger than the $500,000 SBA Express limit, and 15.5% went through SBA Express. Most business purchases in the file were too large for SBA Express.
Lenders that made the most change of ownership loans
- The Huntington National Bank1,924 change of ownership loans
- Live Oak Banking Company1,665 change of ownership loans
- First Internet Bank of Indiana483 change of ownership loans
- Byline Bank353 change of ownership loans
- Hanmi Bank290 change of ownership loans
A past loan does not describe a lender's current policy. The file also has no declined applications, so it cannot show how often a purchase gets financed.
Common questions about buying a business with SBA Express
Can I use an SBA Express line of credit to buy a business?
No. SBA does not allow a change of ownership to be financed with a revolving facility (SOP 50 10 8.1, Sec. A, Ch. 2, Para. A). The purchase must be financed with a term loan.
Does the seller have to leave?
On an Initial Acquisition or Business Expansion, yes. The seller may not stay as an owner, officer, director or employee. The business can hire the seller as a consultant for up to 24 months in total (SOP 50 10 8.1, App. 15, Para. A.9).
Are earnouts allowed?
No. Seller earnouts are prohibited. A buyer rebate based on performance is allowed, and it must pay down the loan (SOP 50 10 8.1, App. 15, Para. A.8).
Do I need experience in the industry?
The lender must show that you can run the business and repay the loan from its cash flow (SOP 50 10 8.1, App. 15). There is no fixed rule on years of experience. Read what lenders look for.
Can an SBA Express loan buy out my business partner?
Yes, an Owner Buyout is one of the four change of ownership categories, and it has its own rules (SOP 50 10 8.1, App. 15, Para. A.1.c). See how a partner buyout works.
What if the seller finances part of the price?
A seller note can count toward your equity only on full standby for the life of the loan, with no payments of principal or interest. It can cover no more than half of the required equity (SOP 50 10 8.1, App. 15, Para. C.2.a). What full standby means.
How to read this
Counts come from SBA's 7(a) loan-level data release, as of June 30, 2026. The file lists loans SBA approved. It does not list declined applications, so it cannot show approval odds. We do not publish any figure built on fewer than 5 loans. A lender's past loans do not describe its current credit policy. Change of ownership is the borrower-type category the lender recorded on the loan. How we build these pages.
Sources
Download this page's data: JSON · CSV
Cite this page: Buying a business with an SBA Express loan. SBA Express Loans, Janover Capital LLC (data as of June 30, 2026). https://www.sbaexpress.loans/buying-a-business-with-sba-express/
Ask lending partners about your purchase
Tell us about the business you want to buy. We route your inquiry to lending partners. Free, with no obligation.
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.