Which buyer scenario describes your purchase?
You are buying your first business. Identify the buyer, the owners after closing, the seller’s proposed role and the experience available to run the company. Current SBA rules use Initial Acquisition as the default ownership-change classification unless another category is documented. A plan to keep the seller involved does not, by itself, establish a different category.
Your existing business is acquiring another operation. An experienced operator may have a different transaction path, but Business Expansion has its own operating-history, industry and ownership requirements. Owning a business already is not enough to assume the expansion rules apply.
You are buying out an owner or partner. Record who owns the company today, who receives sale proceeds, and who remains afterward. An Owner Buyout can involve a complete or partial change. Continuing ownership, a new controlling buyer and the seller’s retained interest can affect classification and obligations. The label “partner buyout” is only the beginning of that review. Current SBA SOP, Appendix 15.
Separate purchase price from the cash needed to operate
Build a sources-and-uses plan before settling on one loan amount. Separate the operating-business purchase, any real estate, transaction costs and working capital after closing. Then identify where the money would come from: buyer funds, proposed lender financing, seller financing and other documented sources.
A purchase can appear affordable while leaving too little cash for payroll, inventory or the period before customers pay. Buying the building adds another decision: property eligibility, ownership structure and financing terms need their own review. Use the business premises section for that branch and the working-capital section for recurring cash gaps. Current SBA rules distinguish these uses and their transaction treatment. Current SOP.
Seller financing can serve different purposes
Seller debt that counts toward a required equity contribution is different from an additional obligation used to bridge the purchase price. Do not assume that any seller note replaces buyer cash or that each proposed funding source qualifies independently.
Under current rules, seller debt counted under the limited equity-source provisions must remain on full standby for the entire 7(a) loan term: principal and interest payments cannot be made during that period. Applicable limited equity sources share an aggregate cap. Other seller obligations need separate review for repayment, subordination and their effect on the business’s debt burden. Current SOP, Appendix 15.
Put the proposed payment schedule and seller’s continuing role in writing early. The seller’s retained ownership and creditor rights can create obligations even where the ownership percentage looks small. A financing discussion should resolve those issues before the parties rely on an informal agreement.
Value, repayment and available cash answer different questions
The purchase price needs support, the business needs capacity to repay, and the buyer needs acceptable funding sources and sufficient liquidity. A valuation does not establish monthly repayment capacity. Strong revenue does not establish how much cash remains after operating costs and debt payments.
Current SBA acquisition requirements differ by transaction category. Ask which historical records, valuation work and independent financial review are needed for your proposed deal, including whether a Quality of Earnings report is required. Resolve that before committing to a due-diligence timetable. Current SOP, Appendix 15.
Before the letter of intent
Identify the buyer scenario, proposed ownership and seller transition. Separate the business and property components. Estimate post-close working capital and document the proposed funding sources. Ask what information is needed to review the structure, and allow time for valuation, financial and legal work.
A letter of intent should reflect a financing path that still needs review. Eligibility, lender underwriting, closing conditions and disbursement are separate steps.
Describe the business purchase you are considering
Prepare an inquiry with the purchase stage, your relationship to the business, approximate price, property component, proposed buyer contribution and seller financing. Keep the first message brief; sensitive financial documents can follow through the appropriate channel. The contact page prepares an email for you to review and send from your email app. Preparing that email is not a loan application or an approval.