How much money do you need down to buy a small business?
By Ricardo Garcia · · Adapted from Chapter 8, “You Don't Need a Lot of Money Down”
Less than most people assume. Most small business acquisitions are financed mostly with debt, and the business's own earnings pay that debt back over time. The buyer usually brings around 10% of the price, and sometimes less of their own savings, depending on how the deal is structured.
That doesn't make it easy or risk-free. But if the main thing holding you back is the belief that you need to be wealthy first, you may be closer than you think.
How the down payment works on an SBA loan
The SBA 7(a) loan program is the most common way small businesses are bought in the United States. The SBA doesn't lend the money itself. It guarantees a large part of the loan, which makes banks more willing to lend.
Under the SBA rules described in the book, in effect as of October 2026, a business acquisition requires the buyer's side to put in at least 10% of the total project cost. Up to half of that can come from a seller note on full standby, meaning the seller receives no payments on it for the life of the SBA loan. On the book's example business:
| Piece of the deal | Share | Amount |
|---|---|---|
| Purchase price | 100% | ~$950,000 |
| Your equity injection | 5% | ~$47,500 |
| Seller note on full standby | 5% | ~$47,500 |
| SBA loan | 90% | ~$855,000 |
SBA rules change every year or two, so always confirm the current requirements with your lender before structuring an offer.
Where the down payment can come from
Your share doesn't have to come entirely from a savings account. Common sources for a professional buyer are savings, a home equity line of credit, a 401(k) rollover, and investors. Each carries its own risk and rules.
The part people leave out
SBA loans require a personal guarantee. If the business can't repay the loan, you're personally responsible for it, and lenders may place a lien on your home. The risk is real, and you shouldn't let anyone tell you otherwise.
The way to protect yourself is in the deal you choose: buy a business with steady demand, leave room in the numbers so it can absorb a slow year, and keep cash in reserve.
This article is for educational purposes only and is not legal, tax, accounting, or financial advice. Examples are illustrative.