SBA Loan Calculator
Model an SBA acquisition loan: monthly payment, total interest, and whether the business’s earnings clear a lender’s DSCR bar — free, instant, no signup.
Down payment: $50,000
Total interest over term: $278,649
SBA lenders generally want a DSCR of at least 1.25× — meaning the business’s SDE covers the annual loan payment with 25% to spare.
Working backwards from a 1.25× DSCR floor at the same rate, term, and down payment — the highest purchase price this business’s SDE could support and still clear a lender’s bar.
SBA 7(a) loans for buying a business
The SBA 7(a) program is the backbone of small business acquisition financing in the US. The SBA guarantees a large portion of the loan, which lets participating banks offer buyers terms a conventional loan usually can’t match: a 10-year (sometimes 25-year, if real estate is included) repayment term, and a down payment as low as 10% of the purchase price. In exchange, the lender underwrites the deal carefully — the business’s cash flow, not just the buyer’s credit, has to support the debt.
DSCR, explained
Debt Service Coverage Ratio is the single number every SBA lender checks before approving an acquisition loan: annual SDE ÷ annual loan payment. A DSCR of 1.0x means the business generates exactly enough cash to make the loan payment, with nothing left over for taxes, reinvestment, or a bad month. Lenders want cushion, which is why 1.25x is the common floor — the business needs to generate 25% more cash than the loan requires. Below 1.0x, most lenders won’t approve the deal at the proposed price and terms at all.
Typical SBA acquisition deal structure
Most SBA-backed acquisitions land close to this split:
- 10% buyer down payment — cash equity the buyer puts in at close.
- 10% seller note — the seller finances part of the price themselves, often on full standby (no payments) for the first 1-2 years, which also helps the buyer’s DSCR.
- 80% SBA 7(a) loan — the bulk of the purchase price, guaranteed in part by the SBA.
The exact split moves with deal size, industry, and the buyer’s experience — but 10/10/80 is the structure most brokers and lenders start a conversation from.
Frequently asked questions
How does an SBA loan work for buying a business?
The SBA's 7(a) program is the most common financing for acquiring an existing small business. The SBA doesn't lend directly — it guarantees a large portion of a loan made by a bank or approved lender, which lets lenders offer buyers longer terms (often 10 years for a business acquisition) and lower down payments (typically 10%) than a conventional business loan would.
What is DSCR and why does it matter for an acquisition loan?
DSCR (Debt Service Coverage Ratio) is the business's Seller's Discretionary Earnings divided by its annual loan payment. It tells a lender whether the business generates enough cash to cover the debt with room to spare. Most SBA lenders want a DSCR of at least 1.25x — meaning for every $1 of annual debt payment, the business needs to generate $1.25 in SDE. Below that, the deal is a hard sell to underwriting.
What is a typical SBA acquisition deal structure?
A common structure is roughly 10% buyer down payment, 10% seller note (the seller finances part of the price and gets paid over time), and 80% SBA 7(a) loan. The seller note is often structured on 'full standby' for the first 2 years, meaning the seller gets no payments until the SBA loan is more established — this actually helps the buyer's DSCR in the eyes of the lender.
How much down payment do I need for an SBA business acquisition loan?
SBA 7(a) guidelines generally require at least a 10% equity injection from the buyer. Some lenders ask for more depending on the industry, deal size, and the buyer's experience — but 10% is the common floor, often the lowest down payment available for a business acquisition compared to conventional bank financing.
Can seller financing count toward the down payment?
Often yes. A seller note on full standby (no payments for the first two years) can typically be counted toward part of the required equity injection, which is one reason seller financing is so common in SBA-backed acquisitions — it reduces the cash the buyer needs at close while still meeting SBA equity requirements.
What happens if a business fails the DSCR test?
If a business's SDE doesn't support the 1.25x DSCR a lender wants at the proposed price, the buyer generally has three options: negotiate a lower purchase price, put more cash down to shrink the loan, or find better loan terms (rate or term) that lower the monthly payment. Working backwards from DSCR to a max affordable price — as this calculator does — is the fastest way to see which lever actually closes the gap.
Related free tools
- SDE Calculator — work out the SDE this loan calculator needs as an input.
- Startup Valuation Calculator — sanity-check the asking price against a revenue multiple.
- Break-Even Calculator — see how much the business needs to sell to cover its costs.
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