2026-01-20
Working Capital & Seller Notes: How to Structure Stronger SBA Offers
Working capital and seller financing are two of the most influential components of a competitive SBA acquisition offer. While many buyers focus primarily on purchase price and equity contribution, lenders evaluate the broader structure and how it supports operational stability post-close.
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Working capital is often an underappreciated driver of approval, especially in acquisitions between $1M and $5M. Buyers who rely solely on the target company’s cash flow from day one can face liquidity pressure during the transition or during seasonal fluctuations. Incorporating a term-financed working-capital component or securing a secondary line provides resilience. This approach aligns with common uses highlighted in Top 10 Ways Companies Use SBA 7(a) Loans.
Seller notes also significantly influence risk. A seller standby note behaves like quasi-equity, providing a cushion for cash flow in the early years. The presence of a seller note shows confidence in continuity and reduces lender exposure. For deeper context on seller involvement in acquisitions, refer to Funding an Acquisition with an SBA 7(a) Loan.
In competitive situations, the combination of thoughtful working-capital planning and a well-structured seller note dramatically improves approval odds. Buyers who anticipate lender expectations typically move through underwriting with fewer delays and more favorable terms.
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