Money & Financing
Can I buy a business with only 10% down?
Yes — this is the standard SBA 7(a) structure for first-time buyers.
Practical Explanation
The SBA 7(a) program is built around a 10% equity injection. The bank lends 90%, you bring 10%. Of that 10%, up to half can be a seller-held note on full standby (no payments for 2+ years), which means in some deals your true out-of-pocket is closer to 5%.
Real-World Example
James buys a $750,000 HVAC business. SBA loan covers $675,000 (90%). His 10% equity injection is $75,000 — but the seller agrees to carry $37,500 on standby, so James writes a check for $37,500 at closing.
Typical cash required
5–10% of purchase price when seller financing is layered in.
Experience required
Lenders prefer relevant industry or management experience; not a hard requirement.
Advantages
- ✓Lowest cash-to-close of any traditional acquisition path
- ✓SBA standardized terms make underwriting predictable
- ✓Up to 10-year amortization keeps debt service manageable
Risks
- !Personal guarantee on the full loan amount
- !Higher leverage means tighter cash flow coverage
- !Standby seller notes must follow strict SBA rules
Frequently Asked Questions
What counts as the 10% equity injection?
Cash, a seller note on full standby, or in some cases a partner's investment. Borrowed funds usually don't qualify.
Is 10% really enough?
It's the minimum. Add operating reserves on top — under-capitalization sinks more deals than overpaying.
Related guides
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