Thinking About Buying a Business in Florida? An SBA Loan May Be Worth Exploring

What Is an SBA Loan?

An SBA loan is generally not money loaned directly to you by the Small Business Administration.

Instead, participating lenders make the loan, while the SBA provides a government guaranty on an eligible portion of the financing.

The SBA 7(a) program is the SBA’s primary business loan program, and eligible financing can potentially be used for purposes including purchasing a business, working capital, equipment, furniture, supplies, certain business debt and commercial real estate. Most 7(a) loans have a maximum loan amount of $5 million. 

The Business Matters Just as Much as the Borrower

This is one of the biggest differences I want new business buyers to understand.

With a home loan, we spend a tremendous amount of time evaluating the borrower and the property.

With an SBA business acquisition loan, we also need to understand:

What are you buying?

How long has the business operated?

How much revenue and cash flow does it produce?

What is the purchase price?

What assets are included?

How much additional working capital is needed?

What experience does the buyer have?

How much money will the buyer contribute?

Can the business reasonably support the proposed debt?

SBA eligibility generally requires an eligible operating business to be for profit, located in the United States, meet applicable size requirements, be creditworthy and demonstrate a reasonable ability to repay the loan. 

An SBA Loan Can Potentially Finance More Than the Purchase Price

This is where SBA financing can become especially interesting for entrepreneurs.

Imagine you are purchasing an existing business for $250,000.

But buying the business is only the beginning.

You may also need money to:

Lease and improve a new location.

Purchase equipment.

Buy furniture or supplies.

Hire employees.

Provide working capital.

Or finance other eligible business needs.

Depending on the transaction and SBA requirements, a 7(a) loan can potentially combine multiple eligible purposes into the financing. 

That means the better question may not simply be:

“How much does the business cost?”

It may be:

“How much capital will I actually need to purchase, operate and grow this business successfully?”

The Bottom Line

Whether you are looking at a business in Royal Palm Beach, Port St. Lucie, Fort Pierce, Stuart, Palm Beach Gardens, Wellington, Jupiter, Tequesta, Boynton Beach, Palm City, Jensen Beach, Hobe Sound, Tampa or elsewhere in Florida, do not wait until after negotiating the purchase to start asking financing questions.

Understand the business.

Understand the numbers.

Understand the financing.

And understand how much capital you may need after the purchase closes.

Because buying the business is one decision.

Having enough capital to operate it successfully is another.

Sources and Further Reading

The primary source for this article is the U.S. Small Business Administration and its current information regarding the SBA 7(a) loan program.

U.S. Small Business Administration 7(a) Loans⁠

Contact Information

Edgar DeJesus

NMLS #230414

Call or Text: 561 223 9347

Email: Edgar@TreasureCoastHomeLoans.com

Helping Florida consumers and business owners explore financing options with greater clarity and understand the questions to ask before making a major financial decision.

Important Disclosure

This article is provided for educational and informational purposes only and does not constitute legal, tax, financial, investment, business, real estate or lending advice. SBA loan programs, eligibility requirements, lender requirements, interest rates, fees, borrower contributions, collateral requirements, documentation requirements and program availability are subject to change.

SBA loan approval is not guaranteed. Financing remains subject to SBA eligibility requirements, participating lender requirements, underwriting, credit review, business financial analysis, ability to repay, required borrower contribution, collateral requirements when applicable, documentation and other applicable conditions.

The U.S. Small Business Administration does not directly make standard 7(a) loans to borrowers. SBA 7(a) loans are made through participating lenders and are subject to SBA requirements. Loan terms and eligibility vary based on the borrower, business, transaction, lender and applicable SBA program requirements.

Innovative Mortgage Services, Inc. is a Florida licensed lender.

Company NMLS #250769

Originator NMLS #230414

Florida Mortgage Lender License #MLD178

Florida Mortgage Lender Servicer License #MLD2167

Equal Housing Lender

Editorial Note: This article was prepared with AI assisted research, organization, and grammatical review, with final content reviewed and approved by Edgar DeJesus NMLS #230414.