Can you really buy a business with no money down?

Why does an SBA loan require cash now?

Much of the "no money down" content online describes SBA rules from before June 2025. Those rules allowed structures where the buyer put in little or nothing. That approach is gone.

• SOP 50 10 8, effective June 1, 2025: ended the zero-down approach and required a minimum equity injection of 10% on change-of-ownership loans.
• SOP 50 10 8.1, for loans that receive an SBA loan number on or after October 1, 2026: sorts acquisitions into four categories. For an Initial Acquisition, the lender cannot reduce the 10%.

The 10% is measured on total project costs: purchase price plus working capital, fees and closing costs. It is not 10% of the price alone.

How close to zero can you get on an SBA deal?

SOP 50 10 8.1 lets three "limited sources" fund part of the injection: a seller note on full standby, other standby debt, and passive minority investors who together hold under 20%. Together they can supply no more than half of the required injection.

Worked example: a $2.5 million project

1. Total project costs: $2,500,000.
2. Required injection: 10% x $2,500,000 = $250,000.
3. Maximum from limited sources: $250,000 / 2 = $125,000.
4. Minimum from other sources: $250,000 - $125,000 = $125,000.
5. That $125,000 is $125,000 / $2,500,000 = 5% of project costs.

Even the 5% version has costs:

• A seller note on full standby pays the seller no principal and no interest for the life of the SBA loan. Many sellers will not agree.
• Passive investors whose money counts toward the injection generally receive only tax distributions until the SBA loan is repaid.
• An investor who funds the other half is not a limited source. If that investor owns 20% or more, they must personally guarantee the loan too.
• If the independent valuation comes in below the price, the gap is paid in buyer cash on top.

When does 100% seller financing happen?

Outside the SBA, a seller can finance the whole price. The market data shows how rare that is:

• 20.4% of US business listings offer any seller financing.
• Where they do, the median stated note is 30% of the price, at 7% interest over 3 years.
• In the IBBA Market Pulse for Q2 2026, sellers received 83% to 92% of deal value in cash at closing. Seller financing was under 10% of deal value.

A seller who accepts no cash at closing is taking all of the risk that you run the business well. Sellers usually ask for something in return: a higher price, a higher rate, or a business that a bank would not finance. The question to ask is why this seller cannot get cash from a bank-financed buyer.

Worked example: 100% seller note on the median business

1. Price: $350,000, the BizBuySell median. Cash flow: $165,000, the BizBuySell median.
2. Seller note at the median stated terms: 7% over 3 years.
3. Annual payment: $350,000 x 0.3705 = about $129,700.
4. Cash flow left for you: $165,000 - $129,700 = about $35,300 a year, before any capital spending or a bad month.

Zero down on short seller terms can leave the owner working for less than an employee would earn. A longer note lowers the payment, but the seller has to accept waiting longer for the money.

If you already own a business

For an existing owner, the SBA injection can go below 10%. Under SOP 50 10 8.1, an existing business buying another business can qualify as a Business Expansion. In that category the lender may reduce or waive the injection if the borrower shows strong liquidity and positive net worth. Lenders typically look for the same or a related industry and two full fiscal years under current ownership. There is no reduction in full personal guarantors. See Can I use an SBA loan to buy a second business?

What do "no money down" pitches leave out?

• Earnouts. SBA rules prohibit seller earnouts in SBA-financed acquisitions. A plan that defers part of the price on future performance does not work with a 7(a) loan.
• Seller notes that are not on standby. They do not count toward the injection. The lender includes their payments in debt service coverage at a maximum 10-year amortization, which lowers what the bank will lend.
• The personal guarantee. Putting in no cash does not mean taking no risk. A 20%+ owner guarantees the full loan.
• The price. A seller who carries the whole price is often pricing that risk in.

The honest version of "low money down" is this: about 5% of project costs from you on an SBA deal with a willing seller, or a reduced injection if you already own a qualifying business.

Where these numbers come from: SBA rules are from SBA SOP 50 10 8 and SOP 50 10 8.1 as summarized by Beancount, Cantrell Law, FunderIntel and Starfield & Smith. Seller-financing listing data is from BigIdeasDB. Cash at closing is from the IBBA Market Pulse Q2 2026. Median price and cash flow are BizBuySell data via Beancount. Confirm current terms with an SBA lender. SOP 50 10 8.1 applies to loans numbered on or after October 1, 2026; lender practice under it is still settling, and the summaries above are secondary sources.

Related questions

Can the seller lend me the whole down payment?

Not on an SBA loan. As of October 2026, a seller note can count toward the injection only if it is on full standby, and limited sources together can cover at most half of the 10%. On a $2.5 million project, that caps the seller's share at $125,000.

Can I use my 401(k) instead of cash?

A ROBS structure lets you invest pre-tax retirement funds in your own business. It needs roughly $60,000 or more of rollable funds and a C-corp. See Can I use my 401(k) to buy a business (ROBS)?

Can an earnout lower the cash I need at closing?

Not in an SBA deal, because SBA rules prohibit seller earnouts. In non-SBA deals earnouts are common, but data from SRS Acquiom shows only 63% pay in full.

Is a deal with no money down always a bad deal?

No. But the seller is carrying all the risk, so check why. Test whether the business would pass a bank's 1.25x coverage test at the price you are paying.

What comes next

If no money down is off the table, the useful question is how to build the capital stack: How do you finance buying a business?

Related articles

• How much cash do I need to buy a business?
• How do you finance buying a business?
• What are creative ways to finance buying a business?
• Can a seller note count toward the SBA 10% down payment?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.