How much cash do I need to buy a business?

What counts as total project costs?

The SBA calls your down payment the equity injection. It is measured against total project costs, not the purchase price. Under SBA SOP 50 10 8.1, total project costs are the purchase price plus working capital, fees and closing costs. The minimum injection is 10%.

For an Initial Acquisition, the category that covers a first-time buyer, the lender cannot reduce that 10%. SOP 50 10 8.1 was issued August 14, 2026 and applies to loans that receive an SBA loan number on or after October 1, 2026. The earlier zero-down approach ended with SOP 50 10 8, effective June 1, 2025.

The costs that go into the base:

• The purchase price you agree with the seller.
• Working capital the business needs after closing to pay staff and suppliers before receivables come in.
• Transaction fees: legal, the quality of earnings (QoE) review and the independent business valuation.
• Closing costs, including the SBA guarantee fee.

One more rule changes the cash math. Every change-of-ownership loan needs an independent business valuation, and total debt is capped at the appraised value. Agree to pay $1.2 million for a business that appraises at $1 million, and total debt can be at most $1 million. At least $200,000 then has to be equity, before working capital and fees.

How much cash at three deal sizes?

These examples use the 10% minimum. Working capital figures are illustrative assumptions. Legal and QoE figures come from the cost surveys cited below. A QoE is required by the SBA only at a purchase price of $3 million or more; below that it is optional but common.

Deal A: the median business ($350,000)

1. Purchase price: $350,000.
2. Working capital (assumption): $25,000.
3. Legal: $10,000, the low end of the survey range.
4. Light QoE: $7,500, the low end of quoted SBA QoE proposals.
5. Total project costs: $350,000 + $25,000 + $10,000 + $7,500 = $392,500.
6. Minimum injection: 10% x $392,500 = $39,250.
7. SBA loan: $392,500 - $39,250 = $353,250.

Deal B: a $1 million business

1. Purchase price: $1,000,000.
2. Working capital (assumption): $75,000.
3. Legal: $28,500, the survey median.
4. QoE: $15,000, inside the $7,500 to $30,000+ proposal range.
5. Total project costs: $1,118,500.
6. Minimum injection: 10% x $1,118,500 = $111,850.
7. SBA loan: $1,006,650.

Deal C: a $3.5 million business

1. Purchase price: $3,500,000.
2. Working capital (assumption): $200,000.
3. Legal: $28,500.
4. QoE: $40,000, the survey median. Required here because the price is $3 million or more.
5. Total project costs: $3,768,500.
6. Minimum injection: 10% x $3,768,500 = $376,850.
7. SBA loan: $3,391,650, under the $5 million 7(a) cap per borrower.

The examples leave out the SBA guarantee fee, because its dollar amount depends on the guaranteed portion of your loan. For FY2026 it is 3% of the guaranteed portion on loans from $150,001 to $700,000, and 3.5% on loans from $700,001 to $5 million (3.75% on any guaranteed portion above $1 million). Adding it raises total project costs, and the 10% with them. Your lender will quote the dollar amount.

Which part of the 10% can come from someone else?

SOP 50 10 8.1 groups three "limited sources":

• A seller note on full standby, with no principal or interest paid for the life of the SBA loan.
• Other standby debt.
• Passive minority investors who together hold under 20% and have no control.

Together these may supply no more than half of the required injection. In Deal B, that cap is $111,850 / 2 = $55,925. The other $55,925 must come from outside that list. For most first-time buyers, that means personal cash. Any co-owner with 20% or more must personally guarantee the loan.

Investors whose equity counts toward the injection generally receive only tax distributions until the SBA loan is repaid. Your own funds must sit in your account about 30 days or be documented as to source. Plan the money before you sign a letter of intent.

What cash do you need beyond the injection?

The 10% is a floor, not a budget. Add these:

• Living costs until the business can pay you. That number is personal. Write it down before you search.
• Any gap between price and appraised value, paid in cash.
• Money spent on deals that die. Legal and QoE work on a failed deal is not refunded.
• A personal reserve. Lenders review liquidity and net worth, and a buyer who drains every account to close is weaker on paper.

The figure that matters is total cash committed, not the injection alone. In Deal B, a buyer who also wants a year of living costs and a reserve needs well above $111,850.

If you already own a business

Buying a second business can count as a Business Expansion under SOP 50 10 8.1. In that category the lender may reduce or waive the injection if the borrower shows strong liquidity and positive net worth. The coverage test is 1.15x instead of 1.25x. Lenders typically look for the same or a related industry and two full fiscal years under current ownership. See Can I use an SBA loan to buy a second business?

Where these numbers come from: SBA equity injection, limited-source, valuation and QoE rules are from SBA SOP 50 10 8.1 as summarized by Beancount, Cantrell Law and Starfield & Smith, and the SBA 7(a) program page. The $350,000 median sale price is BizBuySell data via Beancount. Legal and QoE medians are from a deal cost survey(median deal about $4 million); the $7,500 to $30,000+ QoE range is from Searchfunder. Guarantee fees are from NerdWallet. 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

Does the 10% include working capital and fees?

Yes. As of October 2026 the injection is 10% of total project costs: price, working capital, fees and closing costs. Adding $118,500 of working capital and fees to a $1 million price raises the minimum from $100,000 to $111,850.

Can investors put in the whole 10%?

Not if they are passive minority investors. They are a limited source, and limited sources together can cover at most half the injection. An investor who supplies more usually ends up owning 20% or more and must sign a personal guarantee.

What if the business appraises below the price?

Total debt is capped at the appraised value. The gap comes from buyer cash. You can renegotiate the price or bring more equity.

Do I need more cash on a deal over $3 million?

Usually, yes. A lender-commissioned QoE is required for Initial Acquisitions at a purchase price of $3 million or more. The survey median QoE cost was $40,000.

What comes next

The next question most buyers ask is whether they can skip the cash entirely: Can you really buy a business with no money down? The buyers who end up with the most valuable companies decide what the business goes into before they buy it, and that decision affects how you raise this cash.

Related articles

• Can you really buy a business with no money down?
• What does buying a business cost beyond the down payment?
• How do you finance buying a business?
• What are the SBA 7(a) rules for buying a business, as of October 2026?
• 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.