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  • Writer's pictureRobert Knauer

SBA 7(a) Update — Partial Changes of Ownership



U.S. Small Business Administration (SBA) offers a number of loan programs to support the financing of small businesses. For those interested in acquiring an existing business, the SBA’s 7(a) loan guaranty program is the agency’s flagship program. It derives its name from Section 7(a) of the Small Business Act of 1953 (P.L. 83-163, as amended), which authorizes the SBA to provide business loans and loan guaranties to American small businesses.


For a sense of scope, in FY2021 the SBA approved 51,856 7(a) loans totaling $36.5 billion. The average approved 7(a) loan amount was $704,581. Loans can be up to $5 million and require as little as 10% down by the buyer.


In the past, the SBA did not allow sellers to roll over equity into the acquired business. This meant that sellers of small businesses were unable to "roll equity" as part of the sale of their business if an SBA 7(a) loan was involved, meaning that they were unable to maintain an equity stake in their business and have the opportunity for a "second bite at the apple" in the case that their business is subsequently sold at a higher price than they sold it for.

The U.S. Small Business Administration (SBA) has announced an update to its 7(a) loan program that will allow sellers to roll over equity into the acquired business by allowing "partial changes in ownership" that were once forbidden. This change is designed to make it easier for buyers to acquire businesses, especially those that are owner-operated.


The seller equity rollover update to the SBA 7(a) loan program is a great opportunity for buyers and sellers. Buyers can now acquire businesses with less cash or financing, and sellers can exit their businesses while still retaining an ownership stake.

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