Written by James, Small Business Lending Specialist at Fast SBA
Most buyers asking this question already have a number in their head. Usually it’s 20%, because that’s what a house costs. The SBA’s number for buying a business is lower: 10%.
The catch is in the details. Ten percent of what, in what form, from which sources. And while 10% is the SBA’s floor, your lender can ask for more, and often does.
Here’s what the rules actually say under the current SOP, and what we see lenders do with them. (For the full program picture, start with our SBA 7(a) Loan Guide.)
In this guide:
- The short answer: 10% of total project costs
- What “total project costs” includes
- What the SBA counts as equity
- The seller note rule that catches buyers out
- When a lender will want more than 10%
- Buying out a partner is a different calculation
- How buyers actually cover the injection
- Where to start
The short answer: 10% of total project costs
When you use a 7(a) loan for a complete change of ownership, meaning you take over a business from someone else, the SBA requires an equity injection of at least 10% of total project costs. That’s the buyer’s money at risk ahead of the lender’s, and it can’t come out of the loan itself.
Two things to notice in that sentence. It’s a floor, not a target. And it applies to total project costs, which is a bigger number than the price on the purchase agreement.
“Total project costs” is more than the purchase price
Total project costs means everything it takes to complete the change of ownership, whatever the source of funds: the purchase price, the working capital you need on day one, closing costs, and lender fees.
The gap matters most on working capital. Buyers regularly underestimate how much cash a business burns through in its first 90 days under new ownership, and that money counts toward the project total whether you planned for it or not.
What the SBA counts as equity
The injection doesn’t have to sit in a savings account. The acceptable sources:
- Cash you own outright, verified with account statements
- Money you borrow personally, if you can show an outside source of repayment (a salary, rental income) that doesn’t depend on the business
- Gifts or grants with no repayment obligation, documented properly
- Assets other than cash, valued the right way
- Prepaid expenses you can verify
- A seller note, under strict rules (next section)
What doesn’t work: money the business itself has to repay, and anything you can’t document. Lenders verify injection funds with at least 30 days of account statements and a paper trail at closing. A gift letter alone isn’t enough; the money has to actually move, traceably.
If you’re already sizing up a specific deal, you can check what your numbers look like here. It takes about two minutes. Get pre-qualified here.
The seller note rule that catches buyers out
Seller financing is the most common way buyers shrink the cash they need, and the rule around it is stricter than it used to be. Under the current SOP, a seller note only counts toward your equity injection if it’s on full standby for the entire life of the SBA loan. No payments of principal or interest until the 7(a) is paid off.
Even then, the note can cover at most half of the required injection. On a deal needing $100,000 of equity, at most $50,000 can be a standby seller note. The other $50,000 has to come from you or your investors.
In practice, many sellers won’t wait years for a first payment. That doesn’t kill seller financing; it just moves it outside the injection. A seller note that doesn’t qualify as equity can still be part of the deal structure, as long as the business’s cash flow supports the payments alongside the SBA loan.
When a lender will want more than 10%
The SBA sets the floor. Each lender sets its own bar on top, and deals that clear SBA rules can still miss a specific bank’s credit box. Expect a lender to push the injection above 10% when:
- The price is mostly goodwill (service businesses, agencies, anything with few hard assets)
- You don’t have direct industry experience
- Cash flow coverage is thin after the new debt
- Revenue is concentrated in a few customers, or declining
For goodwill-heavy acquisitions, 15% to 25% down is not unusual. That range isn’t in the SOP. It’s credit policy, and it varies lender to lender, which is one reason the same deal can get a yes and a no in the same week.
Buying out a partner is a different calculation
If you already own part of the business and you’re buying out a partner, the 10% rule softens. If you’ve been active in the business with the same or higher ownership stake for at least the last 24 months, and the business’s debt-to-worth ratio is 9:1 or better going into the deal, the SBA can accept less than 10%.
If you can’t document both, the requirement becomes the lesser of two numbers: enough cash to bring debt-to-worth to 9:1, or 10% of the purchase price in the agreement.
How buyers actually cover the injection
In practice, the money usually comes from some mix of: savings, a HELOC or other personal borrowing with outside repayment, investor cash in exchange for equity, a standby seller note for up to half, and documented gifts from family. Some buyers use retirement funds through a rollover (ROBS) structure; that one is a specialist setup with real compliance obligations, not a loophole, so get proper advice before going near it.
If you’re earlier in the process and still working out whether an SBA loan fits your acquisition at all, our walkthrough on getting an SBA loan to buy a business is the better starting point.
Where to start
If you’re looking at a specific business to buy, the fastest way to find out where you stand is a two-minute pre-qualification. Tell us about the deal, and an independent SBA advisor will come back with what a lender would need to see from you, including the injection.
Fast SBA is not a lender. We connect buyers with independent SBA advisors and may earn a fee when a loan closes. Rates, terms, and injection requirements vary by lender and by deal; the figures above reflect SBA rules as of September 2026 and typical lender practice, not a guarantee for any specific transaction.