
The Risk Most SBA Buyers Don’t Put in the Model
SBA 7(a) financing has made business ownership accessible to thousands of acquisition entrepreneurs. It can provide meaningful leverage, long amortization, and a capital structure that would be difficult to replicate with conventional financing.
That can create extraordinary upside for the right operator buying the right business.
But the same structure comes with an important tradeoff: the personal guarantee.
Buyers often spend weeks diligencing normalized earnings, customer concentration, working
capital, margins, capex, and debt service coverage. They should put the same rigor into
understanding what a failed deal could mean for their personal balance sheet.
A good acquisition model should show both sides of the distribution: what success could create
and what failure could cost.


