Can I use an SBA Loan to Buy a Business? The question of whether a business owner can use an SBA loan to buy a business is a common one. Fortunately, the answer is yes! SBA loans can be used for a range of business purposes, including buying an existing business.

In this article, we’ll cover everything you need to know about using an SBA loan to purchase a business.

What Is an SBA 7(a) Loan?

An SBA 7(a) loan is a type of loan available from the Small Business Administration (SBA). These loans are designed to help small business owners obtain financing for a range of business purposes, including purchasing real estate, equipment, working capital, and refinancing debt.

Can You Use an SBA Loan to Buy a Business?

Yes! An SBA 7(a) loan can be used to purchase an existing business. The SBA even allows franchisors to apply to be pre-approved for SBA loans and get an “SBA Franchise Registry Number” to make the process even easier.

What Else Do You Need to Know?

When you’re buying a business with an SBA loan, there are a few important things to keep in mind:

  • Business Valuation: You’ll need a business valuation to obtain an SBA loan. This will help ensure that you’re paying a fair price for the business.
  • 100 Percent Acquisition: The SBA loan must be used to acquire 100 percent of the business. This means that one owner can buy out another owner or a new owner can purchase the entire business.
  • Eligibility Requirements: To be eligible for an SBA loan, the business must operate for profit, be engaged in or propose to do business in the U.S. or its possessions, and must meet other requirements.

Conclusion

Buying a business can be a great investment, and an SBA loan provides an excellent way to finance the purchase. Of course, it’s important to research all of your options before making a decision.

If you have any questions about business brokers or selling a business in Atlanta, check out Atlantabusinesses.com. This website is a great resource for answers to all of your questions.

What are the things that a SBA loan cannot be used for?

The Small Business Administration does not allow loan proceeds to be used to pay a creditor that could have taken a financial hit, even if that creditor is the same financial institution. This applies to any type of loan that would transfer some or all of the potential loss away from the original lender and onto the SBA.

Is it possible to purchase a business using an SBA loan?

You can use an SBA loan to sell a business, but you must take certain steps first. The most essential one is getting the go-ahead from the lender.

What are the permissible uses of a SBA loan?

Loans provided by SBA can vary in size and can be used for a variety of business purposes, including investments in long-term assets and funds for running operations. However, some loan programs have conditions on how the funds can be utilized, so it is recommended to speak with an SBA-approved lender when applying for a loan.

Is it possible to use an SBA loan to buy real estate?

Yes, SBA 7(a) and 504 loans can be used for purchasing real estate, constructing new structures, and renovating or enlarging existing structures.