Why Business Sellers Should Act Now Under the New SBA Rules
The SBA has recently reset many of its lending standards (some of which we spoke about here). While some rules are stricter, financing is still very much available — banks are lending, buyers are motivated, and deals are closing.
The key difference for sellers today is time. With added requirements and fewer shortcuts, it simply takes buyers longer to secure loan approval and may have to apply to several lenders. That means sellers who start the process sooner put themselves in the best position to close while strong lending options are still on the table.
What’s Changed
- Ownership requirements: Buyers must now be 100% U.S. citizens or permanent residents.
- Credit standards: Minimum SBA score, out of 300, bumped from 155 → 165.
- Down payments: Buyers must bring 10% of the purchase price in cash, with less flexibility on seller assistance. Many of our clients don’t realize that 12 years ago, the requirement was 25%
- Debt service coverage ratios (DSCRs): Lenders are reviewing more carefully, often requiring 1.25–1.35 coverage. When a banker calculates the feasibility of a loan, they look at operating capital, reasonable owner salary, and debt service. The metric that helps them evaluate a position is a simple ratio: net operating income divided by debt service.
These aren’t deal-breakers — but they do mean longer timelines for buyers to gather funds, provide documentation, and move through bank approval.
What Sellers Should Know
- Banks are still lending. SBA loans remain one of the best financing options available, even with stricter rules.
- Serious buyers are still in the market. Many are well-prepared and motivated to move forward.
- Deals are still getting done. In fact, businesses with strong cash flow and clean financials are in higher demand than ever.
Why Acting Now Matters
For sellers, the message is simple:
- The sooner you go to market, the more likely you are to meet your goal.
- Starting earlier gives buyers more time to navigate the loan process.
- Well-prepared businesses remain highly financeable, even under the new rules.
Selling a business takes time, even in the best of circumstances. With today’s SBA environment, waiting could mean a smaller buyer pool or longer delays. But moving forward now allows you to capture buyer demand while banks are still actively funding deals.
Yes, financing is more complex — but opportunities are absolutely still there. Acting sooner gives you the best chance at a smooth and successful sale.
It’s not our place to comment on whether these SBA changes should have been made or not. There’s plenty of discussion in our country about politics without adding to that discussion here. We just want to make sure our clients are well-informed so we can help them buy and sell businesses. Reach out to us today.