Podcast: Download (Duration: 8:32 — 11.9MB)
The Small Business Administration (SBA) has announced significant changes that could impact how business acquisitions and SBA financing are structured starting June 1, 2025. These updates—part of the new SOP 5010(8)—are designed to tighten standards, reduce defaults, and reshape how sellers, buyers, and lenders approach deals.
For entrepreneurs and investors planning to acquire a business using SBA financing, these rules could be game changers. In this post, Beau Eckstein breaks down what’s changing, why it matters, and how to protect your deal before it’s too late.
What’s Changing with SBA Acquisition Rules
Beginning June 1, 2025, any deal that doesn’t have an SBA case number (E-Tran number) before that date will fall under the new rules. Here are the most critical changes:
1. Partial Seller Standby Notes No Longer Count Toward Equity
Previously, sellers could “carry back” part of the down payment—essentially financing a portion of the buyer’s equity injection through a seller note on standby. That’s now over.
“Partial standby seller notes will no longer count toward the buyer’s equity injection,” explains Beau.
Now, at least 50% of the required equity must come directly from the buyer, not from seller financing.
2. Seller Rollover Equity Triggers Personal Guarantees
If a seller retains any equity post-sale (even under 20%), they must personally guarantee the full SBA loan for two years.
That’s a major shift—previously, sellers keeping less than 20% ownership could avoid this guarantee. Most sellers don’t want to sign for loans they’re no longer controlling, so this new rule may make partial buyouts far less appealing.
3. Strict 10% Equity Injection Requirement Returns
All complete changes of ownership must now include a 10% equity injection from the buyer. While this was relaxed in the past, it’s now firmly back in place.
Also, multi-step partial buyouts—like buying 60% now and 40% later—are no longer allowed. The SBA wants full, one-time transfers of ownership.
4. Seller Notes Count Only if on Full Standby for the Loan Term
Seller notes can still contribute to equity—but only if they’re on full standby for the entire term of the loan, which is usually 10 years. In other words, the seller can’t receive payments on that note until the SBA loan is fully repaid.
5. Tighter Eligibility Rules for Investors
Non-U.S. citizens or non-permanent residents can no longer invest in SBA-financed businesses. All investors must be U.S. citizens or permanent residents, which eliminates certain foreign-backed deals.
Additionally, all owners, even those with less than 20% equity, must now personally guarantee the loan.
Why These Changes Matter for Deal Structuring
For dealmakers and business buyers, these changes drastically reduce flexibility in structuring creative financing packages.
Before, a seller could roll equity or carry a note to help the buyer meet down payment requirements. Now, that leverage is limited, and more of the capital must come directly from the buyer’s pocket.
Beau explains:
“Sellers typically don’t mind retaining ownership, but they don’t want to have to sign a personal guarantee for the new buyer. These new rules make that unavoidable in partial buyouts.”
This shift could discourage sellers from offering flexible terms and make some acquisitions financially infeasible under SBA guidelines.
The Hidden Impact: Stricter Credit Standards
Another notable change is an increase in the SBA’s SPSS credit score requirement—from 155 to 165. This affects smaller loans (under $500,000) and could make qualifying more difficult for marginal borrowers.
These higher thresholds are a response to rising default rates. As Beau notes,
“They’re tightening up because defaults are increasing. The SBA wants to get ahead of potential losses.”
What Buyers and Sellers Should Do Now
If you’re in the middle of a transaction—or planning one soon—you must act fast.
✅ Get your SBA case number (E-Tran number) before June 1, 2025.
Deals without a number by that date will automatically fall under the new, stricter rules.
✅ Review your deal structure.
If your acquisition involves rollover equity, partial seller notes, or phased buyouts, you’ll likely need to restructure.
✅ Consult your lender or SBA advisor immediately.
Understanding how these changes apply to your specific deal could save you from costly delays or denials.
Final Thoughts
These new SBA rules represent one of the most significant shakeups in recent years for business acquisition financing. While they add protection against defaults, they also limit creativity in deal structuring—especially for buyers relying on seller-financed equity.
If you’re navigating an acquisition, don’t go it alone.
👉 Schedule a consultation with Beau Eckstein and his team at bookwithbeau.com.
They specialize in helping buyers and sellers structure deals, secure SBA loans, and avoid last-minute disruptions from regulatory changes.
Bonus Resource:
Download Beau’s free eBook, The Biz Scaling Playbook, to learn how to grow your business using AI and virtual assistants.
Get your copy at bizscalingplaybook.com.
Beau Eckstein has spent over 20 years helping entrepreneurs finance, acquire, and scale small businesses. Subscribe to his YouTube channel for expert insights on SBA lending, business acquisitions, and franchise ownership.