If you're planning to finance your first acquisition with an SBA 7(a) loan, the process looks different from what you might expect from a startup or personal loan. Lenders are underwriting the business's cash flow, not just yours, and that changes what you need to prepare.
What lenders actually look for
Three things dominate the underwriting conversation: historical cash flow coverage (can the business's earnings service the debt with room to spare), your relevant industry or management experience, and the equity injection you're bringing to the deal, typically around 10%, sometimes met partly through seller financing.
Getting a Quality of Earnings report before you apply
Lenders move faster, and you negotiate harder, when a QoE report backs up the seller's numbers. DueDilio matches you with vetted QoE providers by deal size.
Compare QoE providers →Expect the loan process to take 60-90 days from application to close, longer if the target business's books need cleanup before a lender will underwrite them.
How this differs from a startup SBA loan
Acquisition loans are collateralized in part by the business's existing assets and cash-flow history, something a startup loan can't lean on. That's often why acquisition financing, despite the larger loan sizes involved, can move through underwriting with fewer open questions than a from-scratch business plan.
What's different when the business is online
Most online businesses (SaaS products, e-commerce stores, content and affiliate sites) don't come with real estate, inventory, or heavy equipment to pledge as collateral. Lenders lean almost entirely on the earnings history and, to a lesser extent, on intangible assets like the domain, the code base, or the customer list. That has two practical effects.
First, not every SBA lender is comfortable underwriting a deal with no hard collateral. Some banks that are active in traditional small business acquisition lending simply don't have a process for evaluating a Shopify store or a SaaS product, so part of your prep work is finding a lender with actual experience closing online-business deals, not just a lender that technically offers SBA 7(a) loans.
Second, the SBA caps how much of a loan can be secured mainly by intangible assets (goodwill) before it asks for a bigger equity injection. Financing above that threshold, roughly $500,000 in intangible assets under current SBA rules, typically bumps the required equity injection from around 10% up to around 25%. Since most of an online business's value is intangible, this threshold matters more here than in a deal with a warehouse or equipment behind it. Confirm the current figure with your lender, since SBA rules do get updated.
Documentation looks different too. Instead of point-of-sale reports and a commercial lease, expect to hand over Stripe or payment-processor statements, Google Analytics or platform traffic data, and ad account histories to back up the numbers on the seller's profit and loss statement.