How to buy a small business: a buyer's guide
Five short pages on finding a business, checking it, and paying for it with an SBA 7(a) loan. Written by Humble Business Brokerage for first-time buyers. We do not represent buyers or sellers, and we are not a lender.
The guide
- How to buy a small business (this page): the steps, start to finish.
- SBA 7(a) loans for buying a business: the rules lenders apply to an acquisition.
- How much down payment you need: the 10% rule, what counts and what does not.
- Due diligence checklist: what to check before you sign.
- What an SBA lender asks you for: the documents and forms.
The steps, start to finish
1. Decide what you can afford
Most small business purchases are financed with an SBA 7(a) loan. The lender will want at least 10% of the total project cost from you, and the business's past cash flow has to cover the loan payments 1.25 times. Work backwards from your cash: with $50,000 to put in, you are usually looking at a total project of up to about $500,000, including working capital and closing costs. How the 10% is counted.
2. Search, and read listings critically
Filter by state, industry, price and cash flow. Look at the price-to-cash-flow multiple on each listing: Main Street businesses often sell for roughly two to four times seller's discretionary earnings. A listing's figures are what the seller or their broker reports; you will verify them later. On Humble Business Brokerage, every listing names who listed it and links to the original.
3. Contact the listing party and sign their NDA
The seller or their broker sends you the confidential information: the business name, financial statements, tax returns and a summary. Ask why the owner is selling, how many hours they work, and who holds the key customer and supplier relationships.
4. Make an offer with a letter of intent
A letter of intent sets the price, what is included (equipment, inventory, the lease), any seller note, the due diligence period and the closing date. It is usually non-binding on price but binding on confidentiality and exclusivity. Your attorney should read it before you sign.
5. Get loan-ready while you do due diligence
Lenders move faster when your package is complete: personal financial statement, three years of tax returns, a resume that shows relevant experience, a business plan with projections, and the seller's financials. The full list. The $99 Loan-Ready Packet puts your numbers and these documents into one lender-style packet, and its readiness page shows what is still missing.
6. Check everything
Compare the seller's profit and loss to the tax returns and bank statements, read the lease, confirm licenses can move to you, and ask the state whether the seller owes taxes that could follow the business. The checklist.
7. Close
The lender orders a business valuation, approves the loan and sets closing conditions. Your attorney drafts or reviews the purchase agreement, the bill of sale, the lease assignment and any non-compete. In a full acquisition financed with an SBA loan, the seller may stay on only as a consultant, for up to 24 months.
Who does what
- The seller or their broker markets the business and answers your questions.
- Your CPA checks the numbers and the tax side of the deal structure.
- Your attorney handles the letter of intent, the purchase agreement and the closing documents.
- Your lender decides the loan. Shop more than one bank.
- Humble Business Brokerage is where you find listings. We are not in the middle of the deal and take no commission.
General information, not legal, tax or lending advice. SBA rules as we understand SOP 50 10 8.1, effective October 1, 2026; a lender decides.