As business brokers, rarely do we come across an all-cash buyer. Many buyers rely on some type of financing to purchase a business. The most common financing we see in business buying is SBA (Small Business Administration) loans. Compared to conventional loans*, SBA loans offer lower down payments, longer repayment terms, and more flexible qualification criteria, which makes them a great option for many buyers.
But not all lenders are created equal.
Even among SBA-approved lenders, there are major differences in experience, internal processes, responsiveness, and risk tolerance. Choosing the wrong lender can slow your deal down or even derail it completely.
To help you avoid that, here are 8 essential questions to ask when evaluating an SBA lender:
PLP lenders are authorized to approve loans in-house, which can dramatically speed up the process. Non-PLP lenders must submit your application to the SBA for final approval. This extra step adds time, paperwork, and potential delays.
Experience matters. You want a lender who closes SBA loans regularly, not someone who dabbles in them. The more SBA deals they’ve done, the more likely they are to anticipate issues, navigate underwriting more smoothly, and get you to the closing table faster.
SBA lenders often have “sweet spots” in terms of deal size and industry focus. Make sure your deal aligns with what they’re comfortable financing. If your business falls outside their typical range, it may cause unnecessary friction or a declined application.
It’s important to note that the current cap for an SBA loan is $5 million, so larger deals may not be eligible or may need supplemental financing.
SBA loans can take anywhere from 60 to 120+ days, depending on the lender. Ask about their typical timelines and what might impact your deal specifically (e.g., deal size, collateral, industry). Time kills deals so make sure your lending partner won’t kill yours.
SBA rules change periodically (like they did on 6/1/2025), but seller notes often factor into your required down payment or equity injection. Ask your lender how a seller note will be treated under current SBA guidelines. Specifically ask if it’s on standby, interest-only, or requiring a personal guarantee.
While the SBA requires at least 10% down, some lenders want more. Ask up front what they require so you can plan accordingly and avoid surprises late in the process.
Some lenders will allow you to roll in working capital, SBA guarantee fees, or even closing costs into the loan. Others won’t. Knowing this early helps you structure the deal and your cash flow more effectively.
Expect to provide detailed financials, tax returns, resumes, projections, business plans, and more. A good lender will give you a clear checklist. The earlier you see it, the more time you have to prepare and the fewer delays you’ll face later. Be prepared. Getting through the underwriting process is not for the faint of heart. We liken it to getting a root canal. They are going to dig deep and the process can be painful.
Choosing the right SBA lender can make your business purchase easier, faster, and far less stressful. We work with a select group of high-performing, nationwide SBA lenders who specialize in business acquisitions. Because we work closely with these lenders, we know how to match the right buyer, business, and lender. In fact, many of our clients benefit from our institutional knowledge and experience faster approvals and a smoother closing process.
If you’re thinking about SBA financing, let us help you start off on the right foot by connecting you with a lender who knows how to get your deal done.
* There are instances where a conventional loan might make sense; for instance, if the loan size exceeds the SBA cap, there are a lot of hard assets, the buyer has an existing business in the industry, or the buyer has an exceedingly strong personal financial statement. Conventional loans are typically quicker with less paperwork, but the rate can vary, and the repayment term is generally shorter.
