How Buyers Finance a $10 Million Acquisition When SBA Cannot Cover the Check

A $10 million acquisition is larger than one SBA loan. The buyer assembles the check from equity they bring, a bank or credit facility sized to the company’s cash flow, and often a note you carry. The headline can still say $10 million. The wire to you is whatever is left after debt payoff, taxes, fees, and the part of the price that is a promise to pay you later.

The short answer: a standard SBA 7(a) loan is capped at $5 million, so it cannot be the whole purchase. Buyers fill the rest with their own cash, a conventional lender, a sponsor, and, very often, a seller note. More cash at closing usually means a tighter price. A bigger note can support a higher headline and leaves you as the lender.

That split is directional. It is not a term sheet for your company.

At Bridge Point Business Brokers, we walk owners through this stack before they accept an offer. If you want the price framed against what a buyer can actually fund, start with a confidential business valuation or M&A advisory. For the smaller files where SBA is the main loan, use our 2026 SBA guide.

This article is not lending, tax, or legal advice. Loan caps, standby rules, subordination, and what counts as equity change with the lender and the program. Confirm the structure with the buyer’s lender and with your own counsel and CPA before you sign a letter of intent.

Why One SBA Loan Cannot Be the Check

SBA 7(a) is the loan most people mean when they say “the buyer will get an SBA loan.” The maximum 7(a) loan is $5 million. On a $10 million purchase, that cap leaves at least half the price to be funded some other way, before anyone talks about working capital, fees, or cash left in the company.

An SBA 504 loan is a different product. It finances major fixed assets — owner-occupied real estate and long-lived equipment — together with a bank and a certified development company. It does not, by itself, buy the goodwill of an operating company. If the real estate is worth a large share of the $10 million, a 504 conversation can matter for the building. It does not replace equity and a cash-flow loan for the business.

Some buyers still use a 7(a) loan for a slice of a larger deal, or they use it only if the business purchase price is carved down by pulling real estate out. Either way, a gap remains. The seller who planned on “SBA will take care of it” is planning on a loan that stops at $5 million.

Below a few million dollars, that cap is often enough, and the rest is a down payment plus a small note. At $10 million, the rest is the deal. Our guide on what changes when a sale crosses $20 million is the next step up, where the stack is a sponsor, senior debt, and rollover, and SBA is usually gone entirely.

One Way a $10 Million Price Gets Assembled

Here is an illustration, not an offer. A buyer agrees to a $10 million price for the company, cash-free and debt-free, and funds it like this:

Change any row and the wire changes. If the bank will only lend $4 million because the quality of earnings cut EBITDA, someone has to cover the missing million. That someone is usually you, through a larger note or a lower price. If the buyer can bring $4 million of equity, the note can shrink and more of the price is cash.

Read every offer as this table. A price without the sources is a sentence.

Buyer Equity: The Cash That Makes the Rest Possible

Equity is money the buyer does not have to pay back on a schedule. It absorbs the first loss if the company stumbles. Lenders want to see it. You should want to see it too, because a buyer with little of their own money is asking you to carry the risk.

Who brings it at this size:

• An individual or a partnership with savings, a liquidity event, or a co-investor. They may still want an SBA slice, and they will still be short of $10 million.
• A search fund or an independent sponsor who raises equity deal by deal. They are real buyers around $10 million. Their equity is committed only if their investors say yes, so “we are funded” needs a date and a name.
• A private equity firm or a family office writing a check from a fund. More common as the price and the EBITDA quality rise. They may also ask you to roll some of your proceeds back in as equity beside them. How that compares with a strategic buyer’s all-cash check is who pays more, and what you give up.

Ask, before exclusivity: how much is already in the bank, how much is still a conversation with investors, and what happens to the price if that equity comes in lower. A letter of intent that says “financing contingency” with no equity number is a right to reprice you later.

More equity usually supports a cleaner close and a smaller note. It can also come with a lower headline, because a buyer writing a large check argues harder about concentration, add-backs, and the manager who has to stay. That trade — cash now versus a bigger number on paper — is the seller’s decision. Make it with the after-tax wire in front of you, not with the headline alone.

The Bank Loan: Sized to Earnings, Not to the Asking Price

The bank does not lend $10 million because that is the price. It lends a multiple of the cash flow it believes, with a coverage cushion, against the company’s ability to pay the loan from operations.

What that means in practice:

• The lender uses a normalized earnings number, often the figure in a quality-of-earnings report, not the broker’s recast. Add-backs that fail shrink the loan.
• A standard 7(a) piece, if one is in the stack at all, still stops at $5 million. The rest of the senior debt has to be a conventional bank loan or a private credit facility that is comfortable above the SBA cap.
• Covenants, a personal guarantee, or a borrowing base on receivables can be part of the bank’s yes. Those are the buyer’s obligations. They become your problem if the deal only works when you guarantee the loan you are exiting. Do not do that casually.
• The loan funds at closing only if conditions are met: insurance, a clean title, landlord consents, and sometimes customer consents. A financing condition that runs for months is a clock on your exclusivity.

If you want the lender’s logic in the smaller-loan world, the SBA lender guide is the companion. At $10 million, expect the same habit — they underwrite historical cash flow — with a larger hole for equity and a seller note to fill.

A useful question for the buyer’s lender, through the buyer: “If EBITDA comes in 15 percent lower, what happens to the loan amount?” The answer tells you whether your price is real.

The Seller Note: You Are the Gap Lender

A seller note is a loan from you to the buyer for part of the price. It is common at $10 million precisely because SBA and the bank leave a gap. Our seller-financing guide covers the instrument. At this size, four points decide whether the note is acceptable.

How much of the price it is

A note of 10 to 20 percent can bridge a real gap. A note that is a third or more of the price means you still own the risk of the company and have given up control. The illustration above, $2 million of a $10 million price, is a bridge. A $4 million note on the same price is a different deal.

Whether it pays

Interest rate, term, and whether payments start at closing or later. If an SBA loan is in the stack, the lender may require the seller note to stand still — no principal, and sometimes no interest — for a period so it can count toward the buyer’s equity. Confirm that with the lender. A note that cannot pay you for two years is not the same as a note that amortizes from month one.

Where you sit if something goes wrong

Seller notes are usually subordinated to the bank. If the company fails, the bank is paid first. Your security, your right to information, and what counts as a default belong in the letter of intent, not in a one-page term sheet the week of signing.

What the note is securing

A note backed only by the business you just sold is a bet on the buyer’s operation. A guarantee, a lien on specific assets, or a holdback in escrow is a different credit. Ask which one you have.

A higher purchase price that is achieved by enlarging the note can leave you with less cash than a lower price paid at closing. Compare the two on cash in the first year, not on the number in the press release you will not issue.

An earn-out is not a note. A note is a debt the buyer owes even if growth disappoints. An earn-out is paid only if a metric is hit, and the buyer may control that metric. Sellers sometimes accept an earn-out to defend a price the bank will not lend against. Know which instrument is filling the hole.

What the Stack Does to the Price You Feel

Three prices exist at once.

The headline is $10 million, or whatever the letter of intent says. It is the number people repeat.

The enterprise value on a cash-free, debt-free basis is that headline after the parties agree what cash you may take out and what debt-like items get paid at closing. A line of credit, equipment loans, taxes due, customer deposits, and deferred revenue can come out of the wire. The valuation guide is where SDE and EBITDA are defined. The closing statement is where they become dollars.

The cash you keep is equity plus bank funds that actually fund, minus your debt, taxes, and deal costs, with the seller note and any rollover still outstanding. On the illustration above, a seller who expected $10 million in the account and receives something closer to $8 million of gross sources — then pays off a $1 million line and sets aside taxes — has not been cheated by arithmetic. They have been reading the wrong line of the offer.

Use that to judge structure:

• An all-cash $9 million can be better than $10 million with a $2 million subordinated note, once you price the risk that the note is not paid.
• A buyer who stretches equity may refuse the last turn of price. That refusal is information. It means the last dollars were never bankable.
• A buyer who agrees to every dollar and pushes the gap into your note is spending your money. Treat the note as a credit decision. Would you lend that amount to this buyer, on these terms, against this company, after you no longer run it?

Taxes sit on top of the stack and depend on asset versus stock treatment. The stock and asset sale guide is the map. Have your CPA run the wire, not the headline, for each structure the buyer proposes.

How to Read the Offer Before You Grant Exclusivity

Before you stop talking to other buyers, the letter of intent should state:

• The price and whether it is cash-free and debt-free
• The equity amount, and whether it is committed
• The loan amount the buyer expects, and from what kind of lender
• The seller note: amount, rate, term, standby, subordination, and security
• Any earn-out, in a sentence you can live with
• A financing deadline inside the exclusivity period
• What happens to the price if the loan comes in short

“Subject to financing” with none of those lines is a free option on your company. Exclusivity is valuable. Trade it for a stack you can model.

Then prepare the file the lender and the buyer’s accountant will use. Monthly numbers, a written add-back list, debt and debt-like items, and a customer file. The sale-prep roadmap is the calendar. The diligence guide is what they will ask once the loan is in process. A $10 million price that depends on a bank will not survive a recast the lender will not use. If the number arrived in an email before you were selling, read what to do with an unsolicited offer before you reply with a counter.

If you are selling in this range — or buying and need a seller who understands the stack — Bridge Point can help you compare the headline to the wire and run a confidential process. Start with a business valuation, M&A advisory, or contact us. Call (352) 515-0226.