Does the 10-year amortization cap mean I can't finance the real estate with the business?

What changed?

Under the earlier SOP 50 10 8, a change-of-ownership loan with at least 51% of proceeds going to commercial real estate could take a 25-year maturity on the whole loan, per Starfield & Smith. That shortcut is gone. SOP 50 10 8.1 applies to loans numbered on or after October 1, 2026, per SBA Information Notice 5000-880695.

A loan that buys the business and the property must now be structured one of two ways:

• Two loans. The real estate loan can run up to 25 years. The business loan runs at most 10 years, and Accredited reports it cannot carry a balloon.
• One blended loan. The maturity is the weighted average of the two uses, based on their share of proceeds.

Accredited reports that the weights are set before the buyer's equity is applied.

How much does this change the payment? A worked example

Assumptions: a $5,000,000 loan, $2,000,000 for the business and $3,000,000 for real estate, at 10% for every part, with monthly payments. Real estate is 60% of proceeds, so the old 25-year shortcut would have applied. A real estate rate may differ in practice.

1. Old method, 25 years on all $5,000,000: factor 0.10904, payment about $545,220.
2. Blended loan: (40% x 10) + (60% x 25) = 19 years. Factor 0.11775, payment about $588,755.
3. Two loans: $2,000,000 over 10 years is about $317,162; $3,000,000 over 25 years is about $327,132. Total about $644,294.

The blended loan raises the payment by about $43,535 a year, or 8%, against the old method. Two loans raise it by about $99,074, or 18%. Starfield & Smith uses the same 60/40 split to reach 19 years and notes that the blended loan has the lower monthly payment of the two options.

Coverage at 1.25x then needs about $735,944 of cash flow for the blended loan and about $805,368 for two loans. The old method needed about $681,526.

If the real estate were less than half of the proceeds, the old rule would not have given the whole loan 25 years either. Accredited gives a $3,000,000 business and $2,000,000 real estate split that blends to about 16 years.

Which structure is better?

It depends on coverage. The blended loan has the lower payment. Two loans keep each use at its own maturity. Starfield & Smith suggests lenders compare both early where coverage is tight. Ask yours to run both.

Does the real estate count in the $3 million quality of earnings threshold?

No. The $3 million threshold for a lender-commissioned quality of earnings report excludes the appraised value of owner-occupied commercial real estate, per CLA and Cantrell Law. A deal can pass or fail that threshold depending on how the price is split.

What are the alternatives?

• Lease from the seller. The business loan covers only the business and the seller keeps the property. Listings that include the property are harder to finance: BigIdeasDB's October 2026 screen of asking prices found 13.2% of such listings clear 1.25x, against 48.4% of listings that exclude it. The screen amortizes everything over 10 years, and BigIdeasDB itself says that overstates the gap. See What happens to the lease when you buy a business?.
• Buy the property separately. A separate lender or a related entity can own it. That keeps the business loan smaller and the coverage test tied to the business.
• Compare the SBA 504 program. Cantrell Law points buyers who also buy real estate to compare it. Matthews reports the 504 historical coverage requirement rises to 1.15x, with projection-based analysis still available when history is short.

The 10-year cap is on the business portion only. The real estate portion keeps its 25 years.

Where these numbers come from: Maturity rules are from SBA SOP 50 10 8.1 as summarized by Starfield & Smith and Accredited. The QoE threshold is from CLA and Cantrell Law. Listing data is from BigIdeasDB and 504 notes are from Matthews. Payment factors are standard amortization at 10%. Confirm current terms with an SBA lender.

Related questions

Can the real estate portion really run 25 years?

Yes. As of October 2026, the real estate portion of a change-of-ownership loan can have a maturity of up to 25 years, per Starfield & Smith. The business portion is capped at 10 years.

Is the 10-year cap on the business portion negotiable?

No. It is a maximum set by SOP 50 10 8.1 for the business acquisition portion, and Accredited reports that the business portion cannot carry a balloon.

Does buying the property change the equity I need?

It can raise total project costs, and the 10% injection is measured on total project costs. Ask your lender how it treats the property in the injection.

What comes next

To see how the payment feeds the lender's limit, read how banks size the loan: How much will a bank lend to buy a business?

Related articles

• What are the SBA 7(a) rules for buying a business in 2026 (SOP 50 10 8.1)?
• How does an SBA loan to buy a business work?
• My deal cleared 1.15x DSCR. What happens now that the SBA requires 1.25x?
• What happens to the lease when you buy a business?
• How much will a bank lend to buy a business?

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.