When you’re buying a business with an SBA 7(a) loan, the documentation requirements are extensive, specific, and non-negotiable. Missing a single item can delay your closing by weeks — or force a restructure of the entire deal.
Most buyers underestimate what’s involved. The lender isn’t just reviewing your financials. They’re building a complete file that demonstrates eligibility, creditworthiness, collateral adequacy, and compliance with every SBA rule that applies to changes of ownership.
At GoSBA Loans, we walk borrowers through this process every day. Here’s the definitive checklist — organized by category — of what your lender will need for an SBA acquisition loan under SOP 50 10 8.
Category 1: The Purchase Agreement and Deal Documents
Buy-Sell Agreement
The signed business, stock, or asset purchase agreement is the foundation document. It must clearly specify:
- Whether the transaction is an asset purchase or stock purchase
- The total purchase price and allocation among assets
- What’s included in the sale (equipment, inventory, real estate, intangibles, assumed debt)
- Seller financing terms (if any)
- Contingencies, representations, and warranties
- Transition provisions (consulting arrangement, non-compete, etc.)
Pro tip: Have your SBA lender review the letter of intent or draft purchase agreement before it’s finalized. SBA-prohibited provisions (like earnouts) caught after signing create painful renegotiation.
Seller Non-Compete Agreement
While not strictly required by SBA, most lenders want to see a non-compete as part of the purchase. Any agreement not to compete is an intangible asset that must be supported by the business valuation.
Category 2: Business Valuation
Independent Business Valuation
Required for every change of ownership. The valuation must be:
- Requested by and prepared for the Lender (not the buyer or seller)
- Exclusive of real estate (which is separately appraised)
- Inclusive of the valuator’s conclusion of value, qualifications, and certifying signature
- Specific about whether the transaction is an asset purchase or stock purchase
- Detailed about what’s included in the sale (including any assumed debt)
For amounts above $250,000 (after subtracting appraised real estate/equipment value), or for transactions between related parties, the valuation must come from a Qualified Source.
For special purpose properties above $250,000, a Certified General Real Property Appraiser with specific industry experience is required.
Lender Verification of Valuation Data
The lender must verify the financial information used in the valuation against the seller’s IRS transcripts. This is a separate, mandatory step.
Category 3: Real Estate Appraisal
If the acquisition includes commercial real estate:
- USPAP-compliant appraisal by a state-licensed or state-certified appraiser
- Appraiser must be independent (no conflict of interest, independent of loan production function)
- When property value exceeds $1,000,000, the appraiser must be state-certified
- Appraisal must be dated within 12 months of the application for guaranty
- Appraisal must identify the Lender as client and/or intended user
- Cannot use an appraisal prepared for the seller or buyer
- Must not include contributory value of rental income or intangible assets
Additional Requirements for Recent Transfers
If the business has been transferred within 36 months prior to the application:
- Appraisal of the business real estate meeting standard requirements
- Either a review by another appraiser selected by the lender, or a site visit by a senior lender staff member (documented with date and items reviewed)
Category 4: Seller Financial Information
Seller’s Financial Statements
- Last 3 complete fiscal years of financial statements (or fewer if business has been open less than 3 years)
- Year-end balance sheets with detailed debt schedules
- Year-end profit & loss statements
- Interim balance sheet with detailed debt schedule
- Interim P&L
- Interim statements must be dated within 120 days of submission to SBA
If Seller Financial Statements Are Not Available
The seller must provide an alternate source of verifying revenues. The lender must discuss in its credit analysis:
- Why financial statements are not available
- How the lender verified business revenue
IRS Tax Transcripts
The lender must obtain IRS transcripts to verify the seller’s financial data. For sole proprietorships, this includes verifying the seller’s Schedule C. For partnerships and corporations, business returns are verified.
For acquisitions of a division or segment of an existing business, the lender may use alternative verification: third-party CPA-prepared statements, sales tax records, transient occupancy tax, credit reporting services, etc.
Category 5: Pro Forma Balance Sheet
A pro forma balance sheet for the business being purchased as of the date of transfer. This is created from the current balance sheet adjusted for:
- All changes in assets and liabilities from the transaction
- The SBA loan and any other new debt
- Required equity injection
- Use of loan proceeds
- Costs of getting the loan (fees, closing costs)
The pro forma must include a complete debt schedule and discussion of all existing and new loan terms.
Category 6: Site Visit
For complete changes of ownership and complete partner buyouts, the lender must conduct a site visit of the business being acquired. The lender’s file must document:
- The date of the site visit
- Comments on what was observed
This isn’t optional and can’t be done virtually. Someone from the lending institution must physically visit the business location.
Category 7: Buyer Financial Information
Owner Financial Statements
- Personal financial statements (SBA Form 413 or equivalent) for all owners of 20% or more
- Must include assets of the owner’s spouse and minor children
- Signed and dated within 120 days of submission to SBA
- Required for all proposed guarantors (except Supplemental Guarantors)
Buyer’s Business Tax Returns and Financials
- Business financial statements or tax returns for the last 3 years
- Interim financial statements for the applicant and any affiliates
- For new businesses and changes of ownership: detailed projections including assumptions showing debt service coverage ≥ 1.15 within 2 years
IRS Tax Transcripts (Buyer)
The lender must verify the buyer’s financial information through IRS transcripts, same as the seller.
Category 8: Equity Injection Documentation
The lender must verify equity injection before disbursing any proceeds:
- Cash: Check/wire transfer copy + 30-day source account statement + deposit confirmation
- Standby debt: SBA Form 155 (or equivalent) with the note attached
- Non-cash assets: Independent appraisal if value exceeds Net Book Value
- Prepaid expenses: Paid invoices, canceled checks, or bank statements
- Borrowed funds: Proposed repayment terms and standby/subordination terms
Category 9: Collateral Documentation
- Detailed listing of all collateral being pledged
- Evidence of proper lien priority on all secured assets
- Evidence that all acquired assets — including transferable licenses — are properly secured
- Real estate: title insurance, environmental review
- Equipment: UCC filings, serial numbers for items valued at $5,000+
Category 10: Franchise Documentation (If Applicable)
- Confirmation that the brand is on the SBA Franchise Directory
- Copy of the executed franchise agreement
- Any additional documents required by the franchisor
- Management agreements not part of the FDD must be reviewed for passive business issues
Category 11: Additional Required Items
- Copy of lease (if the business operates from leased premises)
- SBA Form 1919 for each Co-Borrower
- SBA Form 159 (Fee Disclosure) for any agents or lender fees exceeding $2,500
- Documentation of U.S. National and/or LPR/USCIS status verification
- Environmental questionnaire (if applicable)
- Credit reports for the applicant, all 20%+ owners, and guarantors
Category 12: Lender’s Credit Memorandum
The lender must prepare a comprehensive credit memo addressing:
- Business description and history
- Management experience and qualifications
- Financial analysis of repayment ability (historical and projected)
- Cash flow analysis with debt service coverage calculation
- Pro forma balance sheet analysis
- Equity position and any required injection
- Collateral analysis
- Discussion of the business valuation used to support the purchase price
- Analysis of how the change of ownership promotes sound business development
- Seller financing and standby agreement details
- Insurance requirements (life, hazard, liability)
- Working capital adequacy
- Risk factors and mitigants
Timeline Recommendations
| Item | When to Start |
|---|---|
| IRS transcripts (seller & buyer) | Immediately — can take 4-6 weeks |
| Business valuation engagement | Within 1 week of signed LOI |
| Real estate appraisal engagement | Within 1 week of signed LOI |
| Seller financial statements collection | During LOI/due diligence period |
| Franchise Directory verification | Before signing LOI |
| Environmental review | Within 2 weeks of signed LOI |
| Equity injection documentation | 30 days before expected closing |
The Bottom Line
SBA acquisition loan documentation is extensive, but every item exists for a reason. The key is starting early, working from a checklist, and having an experienced lender who knows exactly what’s needed and when.
Preparing to buy a business with an SBA loan? Contact GoSBA Loans — we’ll provide a customized checklist for your specific transaction and guide you through the entire due diligence process.
