Searcher Guides
Searcher Guides
Self-funded searchers, search fund operators, independent sponsors, and first-time buyers using SBA 7(a) financing all run into the same questions before they know they need a lawyer. These guides answer those questions in plain language: legal counsel, cost, timeline, entity choice, investor equity, personal guarantees, seller notes, seller rollover, and quality of earnings review.
Do I Need a Lawyer to Buy a Business With an SBA Loan?
SBA does not require buyer counsel, but the lender's closing attorney represents the lender, not the buyer.
How Much Does a Lawyer Cost for an SBA Business Acquisition?
Cost depends on deal size, whether the attorney drafts or reviews the purchase agreement, and how much negotiation the deal requires.
How Long Does an SBA-Financed Business Acquisition Take to Close?
SBA 7(a) acquisitions commonly close in 60 to 120 days from a signed letter of intent, paced by underwriting and the appraisal.
What Entity Should I Use to Buy a Business With an SBA Loan?
Most SBA-financed buyers form a new limited liability company, with the operating agreement addressing guarantors and lender consent.
Can Investors Fund My SBA Equity Injection?
Yes, investor cash can count toward the equity injection, but any owner of 20 percent or more must sign a personal guarantee.
Will My Investors Have to Personally Guarantee My SBA Loan?
Under current SBA rules, owners of 20 percent or more must guarantee, while smaller investor stakes generally do not.
Does a Seller Note Count Toward the SBA Equity Injection?
A seller note can count toward part of the injection only if it meets SBA full-standby requirements.
Can the Seller Keep Equity in an SBA-Financed Acquisition?
Yes, SBA permits partial changes of ownership, but a seller who retains equity must sign a personal guarantee for a period after closing.
Do I Need a Quality of Earnings Report to Buy a Small Business?
Not required by SBA, but most searchers order one above a few hundred thousand dollars in purchase price to test the seller's earnings.
Working through one of these questions for an actual acquisition? Request a consultation →