Max loan size is $5 million. Commonly used for business acquisitions and owner-occupied commercial real estate.
10% minimum for acquisitions and startups. In practice, lenders want 10–20% — 10% on strong deals, 20% on weaker ones.
Sweat equity doesn't count. Must be verifiable cash, unencumbered assets, or a properly structured seller note.
Seller note split: You can put 5% cash down and have the seller carry a 5% note on full standby — the SBA counts the combined 10% as your equity injection. Full standby means you don't pay the seller until the SBA loan is paid off (or a set period). Preserves your liquidity.
SBA requires a minimum 1.15x DSCR; most lenders want 1.25x. That ratio — net operating income divided by annual debt service — is the key number that determines whether the deal works at a given rate and loan size.
Every owner with 20%+ equity must sign an unlimited personal guarantee — your home, bank accounts, and investments are all exposed for the full loan balance. No net worth threshold triggers it; it's purely ownership percentage.
Some structures try to keep all owners under 20% to avoid this. Lenders know that trick and scrutinize it.
Business assets are pledged first. For loans over $500k, if business assets don't fully cover the loan, the lender must look at personal real estate to make up the gap — but only if you have 25%+ equity in the property. Under that, they skip it. Once the loan is fully secured, they stop — they won't pile on additional liens just to have them.
If the deal involves buying a building or heavy equipment, the SBA 504 is worth looking at instead. It splits the loan between a conventional lender and a government-backed CDC, with the CDC portion locking in a fixed rate (~5.5–6% for 25 years). Eliminates the variable rate risk entirely.