How do I qualify for an SBA loan to acquire an accounting firm?

To qualify for an SBA 7(a) loan to acquire an accounting firm, you generally need a minimum 10% equity injection of total project costs, a credit profile lenders consider creditworthy (most look for personal scores in the mid-600s or higher), and a target practice whose cash flow can service the debt. Because the SBA guarantees 75% to 85% of the loan, lenders approve deals on profitability and goodwill rather than hard collateral, which is why 7(a) financing fits asset-light CPA practices.

The SBA itself only requires that you be creditworthy, demonstrate a reasonable ability to repay, and be unable to obtain the credit elsewhere on reasonable terms. Individual lenders layer on their own thresholds, so qualifying is really about meeting both the program rules and the lender's underwriting bar.

The equity injection

For a complete change of ownership, the SBA requires a minimum 10% down payment. That 10% is measured against total project costs — goodwill, furniture and equipment, working capital, closing costs, and fees — not just the headline purchase price. In practice the full 10% equity injection can sometimes be partly satisfied by a seller-carried note on standby, but you should plan to fund the buyer's share in cash.

Credit and experience

There is no universal SBA-mandated personal credit score, but many lenders prefer scores in the mid-600s or higher and are most comfortable with borrowers who have relevant accounting or management experience. Your résumé as a future operator of the firm carries real weight, since the lender is betting on your ability to retain the book of business after closing.

The target practice's numbers

Underwriting centers on the acquired firm's historical cash flow. Lenders verify that earnings comfortably cover the new loan payment, which is why recurring revenue and client retention matter so much. Conventional banks often reject accounting practices for lacking machinery as collateral, but with SBA 7(a) financing a lack of tangible collateral typically won't block the loan as long as you have the required down payment and good credit. Lenders still assess your ability to repay, but collateral is taken if it exists rather than required.

What you can borrow and on what terms

Most 7(a) loans cap at $5 million. For an acquisition with no real estate, the maximum maturity is ten years or less. Maximum interest is set as a base rate plus a markup — base rate plus 3.0% for loans over $350,000 — though accounting-practice deals often price around prime plus 2% to 2.75%.

If you are weighing your options, compare the trade-offs in our SBA vs. conventional breakdown and review the documentation lenders expect on our accounting firm acquisition loans page before you apply.

Sources

• SBA 7(a) terms, conditions, and eligibility — U.S. Small Business Administration
• Bank-financing an accounting practice sale — Journal of Accountancy
• Typical terms of an SBA loan for an accounting practice — Accounting Broker Acquisition Group
• SBA loan down payment — LendingTree
• SBA loan requirements — Nav