How much money should I have saved before I start looking for a business?

What goes into the number?

Most buyers only count the down payment. That is one of four buckets. Save for all four before you make your first offer.

1. The equity injection. As of October 2026, under SBA SOP 50 10 8.1, a first purchase (an Initial Acquisition) needs cash from you of at least 10% of total project costs. Project costs are the purchase price plus working capital, fees and closing costs. The lender cannot reduce this for a first deal.
2. Money at risk before closing. Deposits, lawyer time, accounting review and travel are spent before you know the deal will close. If the deal dies in diligence, that money is gone.
3. Living costs. You need to pay your household while you search, while the deal closes, and while the business settles under your ownership.
4. A personal reserve. Cash outside the business for the month when a big customer pays late or a key machine fails. You will have signed a personal guarantee. A reserve keeps a bad month from becoming a default.

One eligibility rule changes the whole calculation. Since March 1, 2026, SBA loans are available only to businesses owned by U.S. citizens or U.S. nationals with a U.S. principal residence. If you do not qualify, you will need other financing, and other lenders and sellers may require a larger down payment.

Two rules shape how you hold the money. The injection must be seasoned, meaning it sits in your account about 30 days, or you must document its source. And a large deposit with no paper trail will slow your loan.

How much for each deal size?

The two examples below use real rule numbers and clearly marked assumptions. Swap in your own living costs.

Example 1: a business at the median sale price. BizBuySell data puts the median Main Street sale at $350K.

1. Purchase price $350,000 plus an assumed $50,000 for working capital, fees and closing costs = $400,000 of total project costs.
2. Equity injection at 10%: $40,000.
3. Money at risk before closing (assumed): $15,000.
4. Twelve months of living costs (assumed): $60,000.
5. Personal reserve (assumed): $20,000.
6. Total to have saved: $40,000 + $15,000 + $60,000 + $20,000 = $135,000.

Example 2: a $2.5 million project.

1. Equity injection at 10%: $250,000.
2. Up to half, $125,000, may come from "limited sources": a seller note on full standby, other standby debt, or passive minority investors. The other $125,000 must be yours.
3. Money at risk before closing (assumed): $50,000. A survey of deals with a median size of about $4 million found median legal fees of $28,500. Quality of earnings proposals for SBA deals run $7,500 to $30,000 or more.
4. Twelve months of living costs (assumed): $60,000. Personal reserve (assumed): $40,000.
5. Total if you find the maximum limited sources: $125,000 + $50,000 + $60,000 + $40,000 = $275,000.
6. Total if you fund the whole injection yourself: $250,000 + $50,000 + $60,000 + $40,000 = $400,000.

One threshold matters as deals grow. For a purchase price of $3 million or more, the lender must commission an independent quality of earnings report. Budget for it.

Can some of the down payment come from other people?

Yes, within limits. As of October 2026, limited sources together can supply no more than half of the required injection. Each comes with a catch.

• A seller note on full standby. The seller receives no principal or interest for the life of the SBA loan. Many sellers will not agree. See what a full-standby note is and why sellers resist it.
• Passive minority investors. They must hold under 20% in total and have no control. If their money counts toward the injection, they generally get only tax distributions until the SBA loan is repaid. See whether investors can fund your down payment.
• Retirement funds. A ROBS structure lets you use pre-tax retirement savings. It needs roughly $60,000 or more of rollable funds, a C-corp, and you must be a real employee of the business. See how ROBS works.

Why plan for 12 months of living costs?

Twelve months is an assumption, not a lender rule. Many buyers plan for about a year of living costs because three things eat time and income.

• The search. Finding a business takes longer than buyers expect. IBBA data shows Main Street deals take 6 to 10 months from a seller hiring a broker to closing. Your search can start well before any given seller lists.
• The close. SBA deals typically take 60 to 120 days from signed letter of intent to closing. If you have already left your job, you are paying household costs from savings the whole time.
• Your salary after closing. The lender tests whether the business's past cash flow covers debt payments 1.25 times. The salary you take comes out of that same cash flow. In a tight deal, you may pay yourself less than you earn today for the first year.

If you keep your job while you search, the living-cost bucket shrinks. See whether you can get an SBA loan after you quit your job.

If you plan to buy more than one business

A first-time buyer saves for one deal. A buyer who wants a group of companies needs a different plan. SBA rules cap 7(a) loans at $5 million per borrower including affiliates. Later deals will need equity from investors, seller notes or other sources. My view is that you should raise capital before you find the first deal, because raising after a letter of intent puts you under time pressure. See how to line up investors before you have a deal.

Where these numbers come from: Injection, limited-source, seasoning, quality of earnings and loan cap rules are from SBA SOP 50 10 8.1 as summarized by Beancount, Cantrell Firm and Starfield & Smith. The median sale price is BizBuySell data via Beancount's SDE guide. Legal fee data is from the Big Deal Small Business deal cost survey; quality of earnings ranges are from Searchfunder. Timelines are from the IBBA Market Pulse Q2 2026 and BizBuySell's SBA timeline guide. ROBS minimums are from Guidant Financial. SOP 50 10 8.1 applies to loans numbered on or after October 1, 2026; lender practice under it is still settling and these are secondary summaries, so confirm current terms with your SBA lender.

Related questions

Can the 10% injection be borrowed?

Sometimes. Lenders generally accept personally borrowed funds, such as a home equity loan, only if you can show you will repay them from income outside the business. Debt repaid by the business counts only as a standby limited source, capped at half the injection. Confirm with your lender before you rely on borrowed money.

Do I need all of this before I start looking?

You need the injection and the at-risk money in hand before you sign a letter of intent, because the injection must be seasoned about 30 days or documented. Living costs and the reserve can keep building while you search, as long as you keep earning.

Should I spend my reserve to win a better deal?

No. You will have signed a full personal guarantee. A reserve is what keeps one bad month from becoming a default on that guarantee.

Are there grants that cover the down payment?

Mostly no. See whether there are grants to buy a small business.

What comes next

Once you know your number, the next question is whether you can keep earning while you search or quit first: can I get an SBA loan to buy a business if I quit my job.

Related articles

• Am I ready to buy a business with no ownership experience?
• Can I get an SBA loan to buy a business if I quit my job?
• Does my spouse have to sign the personal guarantee, and how do I talk to them about it?
• How do I know when I should buy a business?
• 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.