The Complete Guide to Working Capital Loans for Business Acquisitions

Why Working Capital Matters

Buying a business is one thing; keeping it healthy afterward is another.
Many SBA borrowers underestimate post-acquisition cash needs—only to struggle six months later.
That’s where working capital financing comes in.

SBA 7(a) as the Dual-Purpose Tool

The SBA 7(a) loan can fund both acquisition and working capital, allowing borrowers to preserve liquidity post-close.
Common allocations:

• 85–90% purchase price financing
• 5–10% working capital
• 2–3% closing costs and guaranty fees

GoSBA Loans models cash flow to ensure DSCR remains above 1.25× even with added working capital financing.

When to Include Working Capital in Your Loan

1. Seasonal Businesses: To cover payroll and inventory before revenue cycles catch up.
2. Transition Periods: When sellers stay involved post-sale and revenue may fluctuate.
3. Growth Plans: Marketing, hiring, or new contracts immediately after closing.

Case Example: Retail Roll-Up

A retail buyer acquired three stores for $1.8M. GoSBA structured $150K in additional working capital to cover inventory restocking and staffing.
The buffer prevented short-term borrowing and stabilized DSCR above 1.4×.

Lender Expectations

Lenders require itemized working capital budgets—no vague “rainy-day funds.” GoSBA preps clients with breakdowns by payroll, marketing, rent, and supplier payments.

Underwriting loves clarity. The clearer the allocation, the faster the approval.

The Payoff

Working capital within SBA loans is often misunderstood as unnecessary debt. In reality, it’s risk insurance—funded at the same low rate as the acquisition itself.
Borrowers who plan for it maintain stability and credibility with lenders long after closing.