How to Use SBA Financing to Buy a Business

Can You Buy a Business Without Millions in Cash?

James had always dreamed of owning his own business. After spending years in management, helping companies grow, and watching business owners reap the rewards of their hard work, he realized he wanted to build something for himself. But there was just one problem—he didn’t have millions of dollars sitting in the bank.

One day, James came across a profitable business for sale. The owner was retiring, and the business had a solid customer base, steady revenue, and an established brand. It seemed like the perfect opportunity—until he saw the $1.8 million price tag. That number made business ownership feel out of reach.

James assumed that only wealthy investors could afford to buy a business, so he almost walked away from his dream. Then, a friend introduced him to an IBA United Business Advisor who asked him a simple question:

"Did you know that most businesses selling for under $5 million include an SBA loan as part of the deal?"

James was surprised. He had heard of SBA loans but never considered they could be used to finance the purchase of a business. His advisor explained that the vast majority of small business sales involve some level of financing, and SBA loans are one of the most powerful tools available for acquiring a business with little upfront capital.

For the first time, James saw a real path forward. Instead of needing millions of dollars in cash, he could use an SBA 7(a) loan to finance up to 90% of the purchase price. That meant he only needed a 10% down payment—a much more achievable number.

If you’ve ever thought about buying a business but assumed you needed a fortune to do it, this guide is for you. In this whitepaper, you’ll learn:

• How SBA loans work and why they are the most common financing tool for small business acquisitions
• What qualifications you need to get approved for an SBA 7(a) loan
• Special requirements for green card holders and non-citizens
• How to navigate the SBA loan application process
• How an IBA United Business Advisor can help you secure financing and find the right business

Business ownership is within reach—even if you don’t have millions in cash. Let’s explore how SBA financing can help you buy the business of your dreams.

Chapter 1: What Is the SBA and Why It Matters in Buying a Business

If you’re looking to buy a business, one of the first questions that probably comes to mind is: How do I pay for it?

Most people assume they need to have millions of dollars in cash to buy a business. That assumption alone stops a lot of would-be business owners from even looking at deals. But here’s the reality—most businesses selling for under $5 million include some type of financing. That’s just how deals get done.

And one of the most common financing tools? An SBA loan.

What Is the SBA and Why Does It Matter?

The Small Business Administration (SBA) is a government agency designed to help small businesses succeed. One of the ways it does that is by guaranteeing loans issued by banks and lenders.

Here’s why that’s important: Banks don’t like risk. If you walk into a bank and ask for a loan to buy a business, they’ll probably tell you no—unless there’s an SBA guarantee attached to it. That guarantee lowers the bank’s risk, making them more willing to lend to business buyers like you.

Now, here’s the key takeaway:
SBA loans make buying a business possible—without needing millions in the bank.

Instead of coming up with 100% of the purchase price, you can finance up to 90% of the deal, meaning you might only need a 10% down payment to buy a business.

Why SBA Loans Are a Big Deal in Business Acquisitions

If you’re buying a business under $5 million, chances are the deal will include some level of SBA financing. That’s because SBA loans provide structured, predictable funding that makes it easier to close deals.

Here’s why SBA loans are such a game-changer for buyers:

✅ Low Down Payments: Instead of paying everything upfront, you can buy a business with as little as 10% down.
✅ Longer Repayment Terms: SBA loans come with 10-year repayment terms, so you’re not stuck with huge monthly payments.
✅ Lower Interest Rates: Because the SBA backs the loan, lenders can offer competitive rates that beat most other financing options.
✅ Bigger Buying Power: SBA loans let you borrow more than most traditional business loans, which means you can buy a bigger or more profitable business.
✅ Flexibility: These loans can cover not just the purchase price but also working capital, equipment, and sometimes even real estate.

The bottom line? SBA financing makes buying a business achievable for most people—even if they don’t have millions of dollars sitting in the bank.

Common Myths About SBA Loans (And Why They’re Wrong)

A lot of people assume SBA loans are too difficult to get. That’s usually because they’ve heard some bad information. Let’s clear up a few common myths:

🚫 "SBA loans take forever."
It’s true that SBA loans require paperwork, but with the right lender and guidance, you can close in as little as 45-60 days. The key is working with an SBA-experienced lender and an IBA United Advisor who knows how to get deals done quickly.

🚫 "You need perfect credit and a ton of business experience."
Not necessarily. While lenders like to see a credit score of 650+ and some management or industry experience, the SBA’s goal is to help first-time buyers get into business—not just fund people who are already wealthy.

🚫 "SBA loans are only for U.S. citizens."
Not true. Green card holders and some non-citizens can absolutely qualify for SBA financing (we’ll cover that in the next chapter).

How the SBA Helps Business Buyers

Here’s the big picture: The SBA exists to make business ownership possible.

Without SBA loan programs, most small businesses would be much harder to buy and sell. That’s because:
✔ Banks would be too cautious to lend money for business acquisitions.
✔ Sellers would struggle to find buyers who could pay full price upfront.
✔ Buyers would need significantly more personal cash to acquire a business.

SBA financing keeps deals moving. That’s why, if you’re serious about buying a business, understanding SBA financing is crucial.

What’s Next? The SBA 7(a) Loan

The SBA 7(a) loan is the most common loan program for buying a business, and it’s the one you need to understand.

In the next chapter, we’ll break down:

• How the SBA 7(a) loan works
• What you need to qualify
• How much of a down payment is required
• What lenders look for in an SBA loan application

If you’ve ever wondered whether you could actually buy a business, the next chapter will give you the answers. Let’s dive in.

Chapter 2: Understanding the SBA 7(a) Loan – The Most Common Way to Finance a Business Purchase

If you’re serious about buying a business, then you need to understand the SBA 7(a) loan. This is the most common loan program used for business acquisitions, and for good reason—it’s flexible, affordable, and designed for small business buyers like you.

Remember James from earlier? He thought he needed millions in cash to buy a business until he learned about SBA financing. The SBA 7(a) loan is what made his deal possible, and it’s the same tool used in most small business sales under $5 million.

Let’s break down exactly how it works.

What Is the SBA 7(a) Loan?

The SBA 7(a) loan is a government-backed loan issued by banks and lenders that helps entrepreneurs buy businesses, real estate, and equipment—or just get working capital.

But let’s be clear: The SBA doesn’t lend money directly. Instead, the SBA guarantees up to 75-85% of the loan, which lowers the risk for banks. That’s why banks are willing to lend money to business buyers who wouldn’t normally qualify for traditional loans.

Here’s what makes the SBA 7(a) loan the go-to option for business acquisitions:

✅ Loan Amounts Up to $5 Million – Covers most small business purchases.
✅ Low Down Payment – You only need 10-20% down, compared to 30-50% with traditional loans.
✅ Long Repayment Terms – You get up to 10 years to repay, keeping monthly payments lower.
✅ Competitive Interest Rates – Because it’s backed by the SBA, lenders offer better rates.
✅ Covers More Than Just the Business Purchase – You can include working capital, equipment, and even real estate in the loan.

The bottom line? The SBA 7(a) loan is designed to help you buy a business without draining your savings.

How Much Do You Need for a Down Payment?

Most SBA 7(a) loans require at least 10% down, but some lenders may ask for 15-20% depending on the deal.

For example:

• If you’re buying a $1 million business, you’d need $100K to $150K down.
• If you’re buying a $3 million business, you’d need $300K to $450K down.

That’s still a lot less than paying cash for the business, and there are ways to structure the deal to reduce your upfront costs even further (we’ll cover that later).

What Can an SBA 7(a) Loan Be Used For?

You can use an SBA 7(a) loan to:
✔ Buy an existing business (most common use case)
✔ Buy commercial real estate (if it’s part of the business)
✔ Purchase equipment and inventory
✔ Cover working capital needs after the purchase
✔ Refinance existing business debt

The flexibility of this loan makes it one of the best options for first-time business buyers.

Who Qualifies for an SBA 7(a) Loan?

Getting approved for an SBA 7(a) loan isn’t automatic—you still need to meet basic lender requirements. Here’s what banks and lenders look for:

✅ A Credit Score of 650+ (Preferably 680+) – The higher your score, the better your loan terms.
✅ Industry or Business Experience – You don’t need to be an expert, but banks like to see that you have management or leadership experience that relates to the business you’re buying.
✅ A Profitable Business – The business you’re buying must have strong financials to show it can support loan payments.
✅ A Personal Guarantee – You will be required to personally guarantee the loan, meaning if the business fails, you’re still responsible for repayment.
✅ A 10-20% Down Payment – SBA loans require some skin in the game, but it’s still far less than what a traditional loan would require.

Pro tip: Even if your credit score isn’t perfect or you don’t have direct industry experience, an IBA United Advisor can help you position yourself as a strong candidate by structuring the deal properly.

What About Green Card Holders and Non-Citizens?

One of the biggest myths about SBA loans is that only U.S. citizens can qualify. That’s not true.

✅ Green card holders (permanent residents) are eligible for SBA 7(a) loans under the same terms as U.S. citizens.
✅ Some non-citizens on long-term visas may qualify, but they must prove long-term U.S. residency and business ties.
✅ The SBA does not approve loans for businesses with majority foreign ownership—at least 51% of the business must be owned by a U.S. citizen or legal permanent resident.

If you’re a green card holder or have questions about your eligibility, an IBA United Advisor can walk you through your options.

What’s the Process for Getting an SBA 7(a) Loan?

The SBA loan process takes 45-90 days and includes these steps:

1️⃣ Pre-Qualification – The lender checks your credit, experience, and financials.
2️⃣ Loan Application – You submit documents, including tax returns and a business plan.
3️⃣ Lender Review & SBA Approval – The bank and the SBA review your application.
4️⃣ Underwriting & Loan Offer – The lender gives you final terms.
5️⃣ Closing & Funding – Once approved, funds are released, and you buy the business.

The biggest mistake buyers make? Trying to go through this process alone. A lot of deals fall apart due to paperwork issues, misunderstandings, or delays. That’s why working with an IBA United Advisor is crucial—we help you navigate the process and increase your chances of approval.

Final Thoughts: Is an SBA 7(a) Loan Right for You?

If you don’t have millions of dollars in cash but want to buy a business, the SBA 7(a) loan is probably your best option.

✅ It lets you finance up to 90% of the deal
✅ You get 10 years to repay it
✅ It keeps monthly payments manageable
✅ It works for most business purchases under $5 million

The next step? Making sure you qualify and structuring the deal correctly.

In the next chapter, we’ll walk through what lenders look for in an SBA loan application, common pitfalls, and how to improve your chances of getting approved.

If you’re ready to move forward, an IBA United Advisor can help you get started today. Let’s make your business ownership dream a reality.

Chapter 3: Do You Qualify for an SBA Loan?

By now, you understand that SBA financing is the key to buying a business without needing millions in cash. But the big question is: Do you qualify?

Most people assume you need perfect credit, a massive down payment, and years of business ownership experience to get an SBA loan. That’s not true. The SBA wants small business buyers to succeed, and while there are certain requirements you’ll need to meet, most buyers can qualify with the right preparation and guidance.

Let’s break down what lenders look for when approving an SBA 7(a) loan and what you can do to improve your chances of getting approved.

The 5 Key Factors That Determine SBA Loan Approval

Lenders evaluate SBA loan applicants based on five main areas:

✅ Credit Score – Do you have a history of managing debt responsibly?
✅ Business & Industry Experience – Do you have relevant experience to run the business successfully?
✅ Profitability of the Business You’re Buying – Can the business generate enough cash flow to repay the loan?
✅ Down Payment & Financial Strength – Do you have the required 10%+ down payment and financial stability?
✅ Personal Guarantee & Collateral – Are you willing to personally guarantee the loan, and do you have collateral to secure it if needed?

Each of these factors plays a role in how easy or difficult it will be for you to get approved. Let’s take a deeper look at each one.

1. Credit Score: Do You Have the Credit to Get Approved?

Most lenders require a credit score of at least 650 to qualify for an SBA loan, but 680+ is preferred.

Here’s how your credit score impacts your approval odds:

• Below 650: Difficult to qualify unless you have a strong co-borrower, a large down payment, or seller financing.
• 650-679: Possible to qualify, but you’ll need strong business financials and lender flexibility.
• 680-720: Solid range for approval. Most SBA lenders will be comfortable here.
• 720+: You’ll have the best loan options, faster approval, and possibly better terms.

If your credit score is below 650, don’t assume you’re out of luck. There are ways to improve your credit or work around it (such as adding a co-borrower). An IBA United Advisor can help you figure out your best path forward.

2. Business & Industry Experience: Do You Have the Skills to Run This Business?

The SBA doesn’t require you to have owned a business before, but lenders want to see that you have some relevant experience that makes you a good fit for the business you’re buying.

✅ If you’re buying a restaurant, they want to see you’ve managed one before or have experience in the food industry.
✅ If you’re buying a construction company, they’ll want to see experience in project management or contracting.
✅ If you’re buying a service business, they want to see leadership, sales, or operations experience.

If you don’t have direct experience in the industry, don’t panic—but you need a good explanation for why you’ll succeed. Lenders want to minimize risk, so they need to know you can handle the transition.

Tip: If you lack industry experience, consider bringing on a business partner or agreeing to keep key employees post-sale. This makes lenders much more comfortable approving the loan.

3. The Business’s Financials: Can It Repay the Loan?

Lenders aren’t just looking at you—they’re also looking at the business you’re buying to make sure it’s profitable enough to support loan payments.

Here’s what lenders want to see:

✅ Strong, consistent cash flow – The business should be generating enough profit to cover loan payments with a buffer.
✅ Good financial records – Clean tax returns and profit & loss statements for the past 3 years.
✅ A reasonable valuation – The price you’re paying should be fair, based on the business’s financial performance.

If the business is barely breaking even or losing money, lenders will hesitate to approve the loan. This is why choosing the right business to buy is critical—and why working with an IBA United Advisor is a smart move.

4. Down Payment & Financial Strength: How Much Money Do You Need?

Most SBA 7(a) loans require a 10% down payment, but depending on the deal, it could be 15-20%.

💰 If the business costs $1 million, you’ll need at least $100,000-$150,000 in cash.
💰 If the business costs $3 million, you’ll need $300,000-$450,000.

What if you don’t have 10%?

There are ways to work around the 10% down payment by negotiating seller financing, bringing in an investor, or using retirement funds (like a 401k rollover) or home equity to fund the down payment.  We will tell you more towards the end of this chapter.

Having additional savings also helps, because lenders want to see that you have some financial cushion after closing.

5. Personal Guarantee & Collateral: What’s Your Risk in the Deal?

SBA loans require a personal guarantee, which means you’re personally responsible for the loan—even if the business struggles.

Lenders also prefer if you have some collateral (such as real estate, stocks, or other assets) to back the loan. However, the SBA does not require full collateral coverage, so even if you don’t have a lot of assets, you can still qualify based on the strength of the business and your financials.

If you’re worried about collateral requirements, an IBA United Advisor can help you find lenders who are more flexible.

How to Improve Your Chances of Getting Approved

If you’re on the edge of qualifying or want to increase your approval odds, here’s what you can do:

✅ Improve your credit score – Pay off debt, correct any errors on your credit report, and avoid late payments.
✅ Build your business experience – Take relevant courses, shadow a business owner, or partner with someone experienced.
✅ Strengthen the business financials – Focus on businesses with strong cash flow and solid records.
✅ Secure additional capital – Make sure you have enough for the down payment and a cash reserve post-sale.
✅ Work with an experienced SBA lender – Not all banks do SBA loans the same way—some are much better than others.

Next Steps: Structuring Your SBA Loan the Right Way

Now that you know what it takes to qualify for an SBA loan, the next step is structuring your loan package properly and avoiding common mistakes that could cause delays or rejection.

In the next chapter, we’ll cover:
✔ How to submit a strong loan application
✔ What documents lenders will request
✔ Red flags that can get your loan denied
✔ Why working with an IBA United Advisor makes all the difference

If you’re serious about buying a business, now is the time to get your financials in order and prepare for approval. And if you’re not sure where you stand, talk to an IBA United Advisor—we can help you figure it out.

What If I Have Less Than 10% to Put Down?

One of the most common questions we hear is: “Can I still get an SBA 7(a) loan if I have less than 10% down?”

The short answer? Yes, it’s possible—but it’s more difficult.

If you only have 5% down, here’s what you need to know:

✅ You’ll Need to Be Highly Qualified – Lenders will require a higher credit score (usually 680+), strong business or management experience, and a financially stable, profitable business that can clearly support loan payments.

✅ The Seller Will Need to Finance Part of the Purchase – This is actually very common in business acquisitions. Most sellers expect to finance 10-20% of the sale price, so negotiating seller financing is completely normal.

✅ Seller Financing Could Be Even Higher – In some cases, we’ve seen sellers finance 50% or more of the business purchase. It all depends on how motivated the seller is, how strong the business is, and how well the deal is structured.

✅ You May Need a Financial Partner or Investor – If you don’t have enough cash for the down payment, you may be able to bring in a financial partner or an investor who can contribute capital in exchange for equity or a return on their investment. This can help meet the lender’s requirements while allowing you to still run the business.

✅ Down Payment Assistance May Be an Option – In some cases, there are programs or lenders that offer down payment assistance, but these depend on your financial situation, the business type, and available funding options.

✅ You May Already Have the Money and Not Realize It – Many buyers don’t realize they can use other assets to fund their down payment, such as:

• Retirement accounts (401k or IRA rollovers) – You may be able to roll over funds from your retirement account tax-free to use as a down payment.
• Home equity – If you own a home with equity, a home equity loan or line of credit could provide the funds needed.
• Other personal investments or business assets – There may be untapped funds in other accounts you haven’t considered.

If you don’t have a full 10% down, it’s even more important to work with an IBA United Advisor who can help you explore all available options. There are creative ways to put a deal together—even with less cash upfront—but it takes strategy, negotiation, and the right lender connections to make it happen.

If you’re serious about buying a business but aren’t sure where your down payment will come from, talk to an IBA United Advisor today. We can help you figure out the best way to make your business ownership dream a reality.

Chapter 4: SBA Loan Requirements for Green Card Holders and Non-Citizens

Many buyers assume that SBA financing is only available to U.S. citizens, but that’s not true. The SBA does provide financing options for green card holders and, in some cases, non-citizens. However, there are additional requirements that foreign-born entrepreneurs must meet to qualify.

If you’re a permanent resident or a foreign national living in the U.S., you need to understand how SBA loans apply to your situation—because while financing is possible, the rules are different than for U.S. citizens.

Can Green Card Holders Get an SBA Loan?

✅ Yes! Green card holders (legal permanent residents) are eligible for SBA loans under the same terms as U.S. citizens.

The SBA considers legal permanent residents as domestic borrowers, meaning they have the same rights and requirements as citizens. However, to qualify, you must provide proof of your legal residency status with:

📌 Form I-551 (Green Card) – This verifies that you are a legal permanent resident of the U.S.
📌 U.S. Credit History – Lenders will check your personal credit history in the U.S., not just in your home country.

As long as you meet the standard SBA loan qualifications—such as credit score, business experience, and financial strength—you can apply just like a U.S. citizen.

What About Non-Citizens Without a Green Card?

For non-permanent residents, the rules are stricter. You may still qualify for an SBA loan if:

✅ You have a long-term U.S. visa that allows for business ownership.
✅ You can prove strong ties to the U.S., such as living and working here for many years.
✅ Your business meets SBA requirements (profitable, U.S.-based, and majority-owned by eligible individuals).

Common visa types that might qualify for SBA financing:
✔ E-2 Treaty Investor Visa
✔ L-1 Intracompany Transferee Visa
✔ O-1 Extraordinary Ability Visa
✔ H-1B Work Visa (in limited cases, if transitioning to a green card)

However, if you are on a temporary visa or have no established U.S. residency, you will likely not qualify.

SBA Loan Restrictions for Non-Citizens

The SBA has strict ownership requirements when it comes to foreign nationals. The main rule is:

📌 The business must be at least 51% owned by U.S. citizens or legal permanent residents (green card holders).

If a business has majority foreign ownership, it will not qualify for SBA financing. This means that even if you live in the U.S. and are involved in the business, if a foreign entity or non-resident owns more than 49%, SBA financing is off the table.

Other restrictions include:
❌ No financing for businesses with strong foreign ties – If the business has a large percentage of revenue coming from outside the U.S. or is controlled by foreign nationals, SBA lenders will hesitate.
❌ No ownership by individuals without legal U.S. presence – If an owner does not have the right to reside in the U.S., they will not qualify.

Other Challenges for Foreign-Born Business Buyers

Even if you meet the SBA requirements, some challenges remain for green card holders and non-citizens applying for financing:

🚫 Limited U.S. Credit History – Many foreign-born entrepreneurs have a short credit history in the U.S., which makes lenders nervous. If this applies to you, be prepared to show alternative proof of financial responsibility (such as business records, bank statements, or international credit reports).

🚫 Visa Uncertainty – If you are on a visa that requires renewal, lenders may be hesitant to approve a long-term loan. Showing a clear, stable residency path (such as a green card application in progress) can help.

🚫 Higher Down Payment Requirements – Some lenders may require a higher down payment (15-20% instead of 10%) for non-citizens or recent green card holders to offset perceived risk.

🚫 Stronger Business Requirements – Lenders may scrutinize the business financials more closely to ensure the company can sustain itself, especially if you are not yet a citizen.

How to Improve Your Chances of SBA Loan Approval as a Non-Citizen

If you are a green card holder or non-citizen entrepreneur, here’s what you can do to increase your chances of getting approved for an SBA loan:

✅ Strengthen Your U.S. Credit Profile – If your credit history is limited, work on building it up before applying. Pay down any debt, avoid late payments, and use U.S. bank accounts regularly.

✅ Show Strong Business & Financials – Lenders will want to see that the business is stable and profitable, so focus on businesses with strong cash flow and financial records.

✅ Prepare Additional Documentation – Be ready to provide:
✔ Proof of long-term U.S. residency (green card, visa documentation).
✔ U.S. tax returns (if applicable) to show financial stability.
✔ Alternative credit sources, such as business financials or international banking records.

✅ Work With the Right SBA Lenders – Not all banks work well with foreign-born applicants. Some lenders are much more experienced in helping non-citizens secure SBA financing.

✅ Get Help From an IBA United Advisor – We can connect you with the right lenders, help structure your loan application properly, and navigate any obstacles in the approval process.

Final Thoughts: Is an SBA Loan Possible for Non-Citizens?

✅ If you are a green card holder, YES—you can apply under the same terms as U.S. citizens.
✅ If you are a non-citizen with a valid long-term visa, you may still qualify, but the process is more complicated.
✅ If your business has majority foreign ownership, SBA financing will NOT be an option.

The key to success is working with the right lender and making sure your financials, credit, and legal residency status are in order.

If you’re a foreign-born entrepreneur looking to buy a business with SBA financing, talk to an IBA United Advisor today. We can help you understand your options, structure your loan properly, and find the best lender for your situation.

Next Steps: In the next chapter, we’ll cover the SBA loan process step-by-step—so you know exactly what to expect when applying.

If you want to get started now, reach out to an IBA United Advisor and let’s discuss your options! 🚀

Chapter 5: The SBA Loan Process – What to Expect

By now, you know that SBA financing is one of the best ways to buy a business without millions in cash. You also know what it takes to qualify for an SBA loan—credit, experience, a solid business, and some skin in the game.

But what does the actual process look like? How long does it take? What steps do you need to follow to go from application to closing?

A lot of people assume getting an SBA loan is complicated, and while it does require paperwork and patience, the truth is that the process is predictable. If you know what to expect and have the right guidance, you can move through it smoothly and avoid costly mistakes.

Let’s walk through each step of the SBA loan process, so you can be prepared and confident as you move forward.

Step 1: Pre-Qualification – Are You Ready to Apply?

Before you dive into the paperwork, you need to make sure you qualify and have everything in order. This is where an IBA United Advisor can help you assess your financials, identify potential issues, and get you connected to the right lender.

Here’s what happens at this stage:

✅ Review Your Credit Score – Is it 650+? If not, you may need to clean up some issues before applying.
✅ Assess Your Down Payment – Do you have 10%+? If not, we’ll explore alternative options like seller financing or investor partners.
✅ Evaluate the Business You’re Buying – Is it profitable? Do the financials make sense? If not, this could slow or kill the deal.
✅ Match You With the Right Lender – Not all SBA lenders are created equal. Some specialize in certain industries or faster approvals. Working with a lender who understands your deal can make or break the process.

Step 2: Get a Pre-Qualification Letter – Strengthen Your Position With Sellers

One of the most overlooked steps in the SBA process is getting a pre-qualification letter from your lender at the very beginning.

This letter isn’t a formal loan approval, but it’s a non-committal statement from the bank that says:

• You’ve been pre-screened based on your credit, financials, and experience.
• The bank is open to financing you for a business purchase, presuming the BUSINESS AND THE DEAL meets all other requirements..
• The letter is useful when negotiating with sellers or their brokers.

If you’re dealing with a seller’s broker, they will often ask to see a pre-qualification letter before taking you seriously. Many brokers don’t want to waste their time with buyers who can’t secure financing. Having this letter helps position you as a credible, serious buyer and can give you a competitive edge in negotiations.

The bottom line: Ask for a pre-qualification letter early in the process. It’s a small step that can make a big difference when dealing with sellers and brokers.

Step 3: Writing a Strong Application – Selling Yourself to the Bank

This is where a lot of buyers drop the ball—they submit their application and assume the lender will just look at the numbers and approve the loan. That’s not how it works.

An SBA loan is more than just a financial transaction—it’s a relationship between you and the lender. You have to sell yourself to the bank and make them want to give you the money.

✅ You can’t lie about your experience, but you should position yourself in the best possible light.
✅ You need to explain why you are the perfect person to buy this business.
✅ You have to demonstrate that you have the right background, skills, and drive to make it a success.

Banks don’t just lend money—they lend to people they believe can succeed. So your job is to convince them that you are that person.

Step 4: Approaching the Right Banks – Why You Need to Talk to Multiple Lenders

A mistake I see a lot of buyers make is only talking to one bank.

Here’s what you need to know:
✅ All banks follow similar regulations when it comes to SBA lending, so you won’t see massive differences in loan structures.
✅ Banks compete with each other—and that means different lenders will offer slightly different terms.
✅ Some banks specialize in SBA loans, and those banks are much easier to work with.

Because of this, we recommend approaching at least 3 banks to get competitive offers and a wider variety of options.

I’ve worked on deals where we’ve approached 8 to 12 different banks before getting the exact terms we wanted. Many of them would fund the deal, but each one had different offers—different interest rates, down payment requirements, repayment terms, and lender fees.

If you’re serious about getting the best deal possible, you need to talk to multiple banks and compare their offers. An IBA United Advisor can help connect you with the right lenders, negotiate better terms, and get the most favorable loan package for your situation.

Step 5: Closing & Funding – You’re a Business Owner!

The final step is closing, where all parties sign the legal documents and the funds are released. This usually involves:

✔ Signing the loan agreement – You and the lender finalize the terms.
✔ Completing the purchase agreement – The seller officially transfers ownership to you.
✔ Transferring funds – The lender sends the money to the seller, and you take over the business.

Once everything is signed and funded, congratulations—you officially own a business!

Avoiding Mistakes That Could Derail Your SBA Loan

🚫 Messy or missing financials – If the seller’s books aren’t in order, lenders will hesitate to approve financing.
🚫 Not positioning yourself well – If you don’t take the time to “sell yourself” to the bank, they may pass on funding you.
🚫 Only talking to one bank – If you limit yourself to one lender, you could end up with higher interest rates or worse loan terms.
🚫 Not getting a pre-qualification letter – This can slow you down when working with sellers and brokers.
🚫 Trying to do it all alone – Many buyers hit roadblocks that an experienced advisor could have helped them avoid.

Next Steps: Get Help Structuring Your SBA Loan the Right Way

If you’re ready to start the SBA loan process, the best thing you can do is work with someone who knows the ins and outs of SBA financing.

IBA United Advisors help buyers like you:
✔ Find SBA-friendly businesses to buy
✔ Get pre-qualified before applying
✔ Work with the right SBA lender for your deal
✔ Avoid common mistakes that slow down the process
✔ Close faster and with better loan terms

If you’re serious about buying a business, let’s talk. The right preparation and expert guidance can mean the difference between getting approved quickly or hitting frustrating roadblocks.

Next Steps: In the next chapter, we’ll cover common pitfalls buyers face and how to make sure your deal goes smoothly.

But if you’re ready to move forward right now, talk to an IBA United Advisor today. Let’s get you on the path to business ownership! 🚀

Chapter 6: Common Pitfalls and How to Avoid Them

Applying for an SBA loan is one of the best ways to finance the purchase of a business, but that doesn’t mean the process is foolproof. Many buyers run into roadblocks along the way—often because they didn’t know what to expect or didn’t get the right help early on.

I’ve seen too many deals fall apart over avoidable mistakes, and I want to make sure that doesn’t happen to you.

Let’s break down some of the most common SBA loan mistakes buyers make, how to avoid them, and why working with an IBA United Advisor can drastically improve your chances of success.

Mistake #1: Not Preparing Financial Documents Properly

One of the biggest reasons for delays (or outright loan denials) is incomplete or messy financial paperwork.

📌 The SBA requires extensive documentation, including:
✔ Your personal and business tax returns (last 3 years).
✔ Profit & Loss statements (P&L).
✔ A detailed personal financial statement.
✔ Bank statements and other supporting financial records.

🚫 Common problems that delay SBA loans:
❌ Tax returns don’t match profit & loss statements.
❌ The seller’s financials are inaccurate or incomplete.
❌ Buyers forget to disclose liabilities, credit issues, or personal debt.

✅ How to avoid this mistake:
✔ Get your personal financials in order before applying.
✔ Request detailed financial records from the seller upfront.
✔ Work with an IBA United Advisor to ensure everything is accurate before submitting it to a lender.

Mistake #2: Choosing a Business That Doesn’t Qualify for SBA Financing

Not all businesses meet SBA requirements, and choosing the wrong business can completely kill your loan application.

🚫 Businesses that usually don’t qualify for SBA financing:
❌ Speculative or passive investment businesses (e.g., real estate flipping).
❌ Businesses with high-risk financials or inconsistent cash flow.
❌ Businesses that derive too much revenue from overseas.
❌ Businesses that lack proper tax documentation or clean books.

✅ How to avoid this mistake:
✔ Ensure the business has strong financial records and steady profits.
✔ Verify the industry is SBA-eligible before making an offer.
✔ Have an IBA United Advisor review the business with you BEFORE submitting a loan application.

Mistake #3: Assuming the Seller Will Finance 100% of the Deal

Some buyers assume they can buy a business with zero money down by getting the seller to finance the entire purchase. This almost never works.

🚫 Why this is a mistake:
❌ Most SBA lenders require buyers to invest at least 10% of the purchase price.
❌ Sellers typically won’t finance 100% of the deal—especially if they don’t know you.
❌ Lenders want buyers to have skin in the game—it reduces risk.

✅ How to avoid this mistake:
✔ Expect to put down at least 10% (or find creative ways to fund it).
✔ Negotiate reasonable seller financing (10-20% is common).
✔ Work with an IBA United Advisor to structure your financing properly.

Mistake #4: Working With Banks That Don’t Specialize in SBA Loans

Here’s a hard truth: Not all banks are good at SBA lending.

I’ve seen buyers waste weeks or months dealing with banks that don’t specialize in SBA loans—only to get denied or stuck in endless delays.

🚫 Why this is a mistake:
❌ Some banks rarely approve SBA loans—even though they technically offer them.
❌ Each bank has its own risk tolerance—some are much stricter than others.
❌ Processing times vary greatly—some banks are fast, while others take forever.

✅ How to avoid this mistake:
✔ Only work with banks that specialize in SBA loans.
✔ Talk to at least 3 lenders (or more for competitive offers).
✔ Let an IBA United Advisor connect you to the right SBA-friendly lenders.

Mistake #5: Not Structuring the Deal Correctly

Even if you qualify for an SBA loan, a poorly structured deal can cause major problems.

🚫 Common deal-structuring mistakes:
❌ Overpaying for the business—lenders won’t finance an overpriced deal.
❌ Not including working capital—you need cash reserves to run the business after purchase.
❌ Failing to properly negotiate seller financing or earn-out agreements.

✅ How to avoid this mistake:
✔ Work with an advisor who understands deal structuring.
✔ Make sure the purchase price is justified by the business’s cash flow.
✔ Include working capital in your loan request to avoid cash flow issues post-sale.

Mistake #6: Going Through the SBA Loan Process Alone

This is one of the biggest mistakes buyers make—they try to handle everything on their own, thinking they can just “figure it out.”

🚫 Why this is a mistake:
❌ The SBA loan process is complex—missing one small detail can delay or kill your deal.
❌ Buyers often don’t know which banks to approach—wasting time with lenders who won’t approve them.
❌ It’s easy to overpay for a business or structure a deal poorly without expert guidance.

✅ How to avoid this mistake:
✔ Work with an IBA United Advisor who can guide you through the process.
✔ Let an advisor connect you with the right lenders.
✔ Get professional help to structure your deal correctly and avoid costly mistakes.

Final Thoughts: Avoiding SBA Loan Pitfalls & Closing Your Deal Successfully

SBA financing is one of the best ways to buy a business, but it’s not automatic—you have to avoid mistakes that could cost you time, money, or even the deal itself.

✅ Prepare your financials properly—incomplete paperwork is a deal killer.
✅ Choose a business that qualifies—not all businesses are SBA-eligible.
✅ Don’t assume seller financing will cover everything—you need your own capital.
✅ Work with SBA-friendly banks—not all lenders are created equal.
✅ Structure the deal correctly—or risk approval issues.
✅ Don’t try to do it alone—having an expert on your side dramatically improves your success rate.

The easiest way to avoid all of these pitfalls? Work with an IBA United Advisor.

We specialize in helping buyers navigate the SBA loan process, avoid costly mistakes, and get deals done efficiently.

If you’re serious about buying a business, don’t make these common mistakes. Talk to an IBA United Advisor today and let’s get you on the path to success. 🚀

Conclusion & Call to Action: Let IBA United Guide You to Business Ownership

Owning a business doesn’t require millions in cash—but it does require the right strategy, financing, and expert guidance. The SBA loan process can be complex, and without the right support, it’s easy to run into roadblocks that delay or kill your deal.

That’s where an IBA United Business Advisor comes in.

We specialize in helping entrepreneurs like you successfully buy businesses with SBA financing. Whether you're just starting your search, need help structuring a deal, or are ready to apply for financing, our experienced business advisors are here to guide you every step of the way.

Here’s How IBA United Can Help You:

✅ Find SBA-Friendly Businesses for Sale – Not all businesses qualify for SBA financing. We’ll help you identify businesses that are fundable and profitable.

✅ Secure SBA Financing with Lower Down Payments – We know which lenders to approach and how to structure deals to get you the best terms.

✅ Navigate the SBA Loan Application Process – From pre-qualification to closing, we help you avoid common pitfalls and move through the process smoothly.

✅ Negotiate Favorable Deal Terms – We ensure you don’t overpay, structure seller financing properly, and get the best terms possible.

📞 Get Started Today – Your Business Ownership Journey Begins Now

The best time to start is now. If you’re serious about buying a business, let’s talk about your options and create a clear plan to make it happen.

📍 Visit IBAUnited.com to book a free consultation.

📞 Contact an IBA United today and take the first step toward owning your business.

🚀 Your future as a business owner is closer than you think—let IBA United help you get there.