You Found a Business on BizBuySell. Here Is How the Money Gets Raised (2026)
by Raises.com
A business found on BizBuySell gets paid for in layers, and the lender sizes the layers before any investor sees the deal. Most buyers start with an SBA 7(a) loan: 78% of buyers in BizBuySell's own Q2 2026 survey expect to use one. From October 1, 2026, SBA requires a 10% equity injection on an initial acquisition. It wants debt service coverage of 1.25. And seller debt and passive minority investors can cover no more than half of the injection. Deals too large for SBA, or structured without it, run a stack instead. On 2026 lower middle market deals, lenders put senior term loans at about 3x EBITDA. They wanted coverage of 1.0 at minimum, with a buffer at 1.15. And they asked the buyer to show 10 to 20% of the price in net worth or liquidity. A seller note plus rollover equity closed the gap on a July 2026 Texas HVAC deal. Whatever equity comes from investors needs a vehicle first: a fund or SPV, a private placement memorandum, a subscription agreement, an operating agreement, a model and a data room.
This page picks up where the listing stops. You found the business, the seller or broker sent the financials, and a letter of intent is close. The lender figures below come from the Raises.com podcast capital markets episode with Tre Brown, Head of Capital Markets at Raises.com, and from published client transactions. They record what lenders asked for on 2026 deals, not what any lender will offer you. The SBA rules come from SBA's own SOP 50 10 8.1, and the marketplace numbers come from BizBuySell.
Read the listing like a lender
Start with the words "cash flow." On BizBuySell they mean seller's discretionary earnings. BizBuySell's own CPA guide says the two terms are used interchangeably as marketing shorthand. It also says SDE leaves out capital expenditures, working capital and debt service. And SDE adds back the owner's pay.
Lenders test coverage on a different line. SBA defines historical debt service coverage as EBITDA divided by the combined debt service after the purchase. The CPA guide says to deduct a market-rate salary when a working owner has to be replaced. So take the salary of whoever will run the business off the listing's number before you test anything.
Then look at price. In Q2 2026, BizBuySell's active listings asked 3.13 times cash flow on average. The businesses that sold went for 2.65 times, at 93% of asking. A buyer who underwrites to the asking price starts the lender conversation above where the market actually closes.
Last, remember what the listing is. BizBuySell's terms say it has no obligation to verify what sellers post. The tax returns and bank statements are the numbers. The listing is the pitch.
Two routes to the money
| SBA 7(a), from October 1, 2026 | Structured stack, 2026 lender benchmarks | |
|---|---|---|
| Loan size | Up to $5,000,000 for a standard 7(a) loan | Senior term loan at about 3x EBITDA; asset-based facility at 70 to 80% of heavy assets |
| Buyer equity | At least 10% of total project cost on an initial acquisition, and it cannot be reduced | 10 to 20% of the price shown in net worth or liquidity |
| Seller paper | Counts as equity only on full standby, inside the limited half | A seller note plus rollover closed the gap on a July 2026 Texas HVAC deal |
| Coverage | 1.25 on an initial acquisition | 1.0 at minimum, buffer at 1.15 |
| Junior money | Standby debt counts toward equity only if it takes no principal or interest for the life of the 7(a) loan | Private credit at 10 to 12% of yearly revenue, priced at 12 to 15% |
| Diligence | Business valuation; a quality of earnings report when the price is $3M or more | Set by each lender |
| Timeline | Set by the lender | The lender on the Texas HVAC close quoted three weeks and took two months |
BizBuySell's Finance Center points buyers to three SBA 7(a) options. T Bank covers loans of $1M to $5M with a 700+ credit score. iBusiness Funding, which works through a network of approved SBA lenders, covers $100,000 to $5M with a 650 minimum. Hanover Bank covers $350,000 to $5M with a 680 minimum. BizBuySell's terms say it is not a lender or loan broker and takes no part in lending decisions, so the terms come from the bank.
Which route fits comes down to size and structure. Most BizBuySell listings sit well inside SBA range: the median listing asked $406,500 in Q2 2026. A company with a few million of EBITDA can outgrow the $5M loan. A sponsor whose equity comes mostly from passive investors runs into SBA's cap on limited sources. Both point to a stack built from several sources.
Three tests before the LOI
Each of these tests uses numbers the seller has already sent. Each one can end a deal in financing. And each one is visible before you sign a letter of intent.
1. The coverage test. Coverage is the cash the business earns divided by the debt payments it owes over the year. A ratio of 1.0 means every dollar of earnings goes to the lender. SBA wants 1.25 on an initial acquisition. Outside SBA, lenders on 2026 deals wanted a buffer at 1.15, so a soft quarter does not trip a default. Run it on the seller's trailing numbers, less a manager's salary, with your proposed debt. A miss has three fixes: a lower price, a different structure, or more equity. Each is easier to win before the LOI than after it.
2. The margin test. Banks underwriting a roughly $5M business wanted EBITDA at 30 to 40% of revenue. BizBuySell's 2025 HVAC data shows a thinner line: median cash flow at about 25% of revenue, and that is SDE, before any owner's pay comes out. Below the band, the plain term loan gets smaller, since it is sized off EBITDA. On an SBA deal, the 1.25 coverage test is the one to run first.
3. The MCA test. Look for merchant cash advances in the seller's bank statements. Advances seen on 2026 deals carried effective rates of 30%, and some ran to 50%. An advance is not a reason to walk away. The balance becomes a line to pay off at closing, and it changes the coverage math the day you own the company.
Pass all three and the business is worth a lender's time. The benchmarks behind the tests are collected on acquisition financing benchmarks 2026.
A worked example on BizBuySell's HVAC numbers
BizBuySell's full-year 2025 tables include a line for HVAC businesses: 123 reported sales, a median sale price of $800,000, median revenue of $1,271,681 and median cash flow of $315,225. The median asking price was $899,500. Sales closed at 93% of asking on average, after a median 181 days on the market. Here is that median deal run through the SBA rules that apply from October 1, 2026.
| Line | Figure | Where it comes from |
|---|---|---|
| Purchase price | $800,000 | BizBuySell's 2025 median HVAC sale price |
| Minimum equity injection | $80,000, plus 10% of any closing costs or working capital in the project | SOP 50 10 8.1: 10% of total project cost on an initial acquisition |
| Most that seller debt and minority investors can cover | $40,000 | Limited sources: no more than half of the required injection |
| Cash the buyer brings from unlimited sources | At least $40,000 | Cash that is not borrowed, or a similar unlimited source |
| Cash flow on the listing | $315,225 | Seller's discretionary earnings, before a manager's salary |
| Most annual debt service at 1.25 coverage | $252,180 | $315,225 divided by 1.25, before any salary comes out |
| Quality of earnings report | Not required | The price is under the $3M threshold |
Two things follow. Only $40,000 of a seller note can count toward the equity on this deal, and only if the seller takes no payments for the life of the 7(a) loan. Any seller note beyond that is debt, and its payments count against the 1.25 test. And every dollar of salary for whoever runs the business comes off the $315,225 before the test runs. A buyer who plans to hire a general manager needs that number before the LOI.
The seller financing gap
BizBuySell's Q2 2026 survey found that 90% of buyers expect seller financing to be part of their purchase. Only 29% of owners plan to offer it. Almost half said they will not, and 23% were undecided. A buyer whose plan depends on a large seller note is planning around something most sellers have not agreed to.
Ask early. Put the seller note, its size and its standby terms in the LOI, and test the deal without it before you sign. Rollover equity is the other lever: the seller keeps a stake in place of part of the cash. On a July 2026 Texas HVAC transaction, a seller note plus seller rollover equity closed the gap. It cut the cash needed at close and kept the seller invested through the transition.
BizBuySell's own report quotes a Texas broker who says even a modest seller note can strengthen an SBA-financed deal and reduce the equity needed at closing. Under SOP 50 10 8.1, that works only on full standby and only inside the limited half. A note that pays the seller from day one is debt, and it is sized against coverage like any other loan.
SBA 7(a) buyers: the October 1, 2026 rule
SBA Information Notice 5000-880695, published August 14, 2026, issued SOP 50 10 8.1. It applies to applications that receive an SBA loan number on or after October 1, 2026, and change of ownership lending now sits in Appendix 15. Five parts matter to a buyer.
- Equity injection. An initial acquisition needs at least 10% of total project cost, and SBA says it cannot be reduced or eliminated.
- Limited sources. Standby debt, seller debt on full standby and non-controlling minority equity are limited sources. Alone or combined, they can supply at most half of the required injection.
- Who counts as a minority investor. Less than 20% of the business and no control. When that money counts toward the injection, distributions beyond the investor's tax on the business income are barred until the 7(a) loan is paid off.
- Coverage. An initial acquisition must show debt service coverage of 1.25:1.
- Quality of earnings. At a purchase price of $3M or more, an initial acquisition or expansion also needs a quality of earnings report, in addition to the business valuation. It must be independent and done for the lender, never prepared by or for the buyer or the seller.
The rule changes how the equity gets raised. Passive investors count toward the limited half only, and they wait for distributions until the loan is repaid. Picture a buyer who planned to cover the whole injection with small outside investors and a seller note. After October 1, that mix fails on an SBA deal.
What has to exist before an investor wires
If investor equity is part of the stack, investors need something to wire into. It gets built in this order.
- The vehicle. A single-purpose SPV for this business, or a fund if more deals will follow. Investors own units in it, and it owns the stake in the company.
- The private placement memorandum. It discloses the business, the risks, the terms and where the money goes, and securities counsel drafts it.
- The subscription agreement. Each investor signs one to commit capital and to confirm they qualify.
- The operating agreement. The rules of the vehicle: who gets paid when, what fees apply, how votes work and what happens at a sale. On an SBA deal it has to match SBA's limit on distributions.
- The financial model. One model for both audiences: sources and uses, the debt schedule, coverage by year and investor returns.
- The data room. The seller's financials, as far as the NDA allows, plus the model, the documents and each diligence report as it arrives.
The order matters, because lenders and investors each wait on the other. A lender asks whether the equity exists. Investors ask whether the loan is committed. Build the model and the data room once, show both sides the same file, and the two conversations can move in parallel.
Raises.com builds this part. It does not list or broker businesses, and it does not replace your counsel. It sets up the fund or SPV, prepares the private placement memorandum, subscription agreement and operating agreement, builds a CFA-reviewed model and the data room, and then makes debt and equity introductions. See how Raises.com funds business acquisitions, or the side-by-side on BizBuySell vs Raises.com.
A worked sequence
| Stage | What gets done | Who it satisfies |
|---|---|---|
| Search | Saved searches on BizBuySell and its alternatives; one target picked | You |
| Before the LOI | Coverage, margin and MCA tests on the seller's numbers, less a manager's salary; price anchored to closed multiples, not asking | You |
| LOI signed | Price, seller note size and standby terms, rollover, and the diligence period agreed | The seller |
| Lender | SBA or a structured stack chosen; term sheet; the equity gap becomes a number | The lender |
| Vehicle and documents | SPV or fund, private placement memorandum, subscription and operating agreements, model, data room | Investors |
| Raise and close | Equity commitments against the gap; quality of earnings if the price is $3M or more; closing | Everyone |
Leave slack in every row. On the July 2026 Texas HVAC close, the lender quoted three weeks and needed two months, and every other row waited on it.
Frequently asked questions
How much money do I need to buy a business on BizBuySell?
On an SBA 7(a) initial acquisition from October 1, 2026, at least 10% of total project cost. On BizBuySell's 2025 median HVAC sale of $800,000, that is $80,000 before closing costs. At least half has to come from cash that is not borrowed, or a similar source. On larger 2026 deals outside SBA, lenders asked buyers to show 10 to 20% of the price in net worth or liquidity.
Can the seller note count as my down payment?
On an SBA loan, only on full standby. That means no principal or interest for the life of the 7(a) loan. It also counts only within the limited half of the injection. Outside SBA, the seller and the senior lender settle it between them and you. On a July 2026 Texas HVAC close, a seller note plus rollover equity closed the gap.
Can investors fund the down payment?
Yes. They invest through a vehicle, an SPV or a fund, and the private placement memorandum, subscription agreement and operating agreement have to be in place before the money moves. On an SBA deal, a non-controlling investor holds less than 20% and counts only toward the limited half. Until the loan is repaid, that investor gets no distributions beyond tax on the business income.
Does BizBuySell offer financing?
Its Finance Center lists three SBA 7(a) lenders, and a listing can carry an SBA Loan Eligible badge. Its terms say it is not a lender or loan broker and that the badge is not a loan approval or a commitment to lend. More in the BizBuySell review, and on listing and membership costs in BizBuySell pricing and listing fees.
What if the business is too big for an SBA loan?
A standard 7(a) loan tops out at $5,000,000. Above that, or for a sponsor raising outside equity, the purchase runs on a structured stack. On 2026 deals that meant senior debt at about 3x EBITDA, then junior capital, seller paper and investor equity. For where larger targets are marketed, see Axial alternatives, Axial vs Raises.com and BizBuySell alternatives. To work through the capital on a specific business, book a strategy call.
Sources
Web sources read on September 22, 2026.
- Lender figures: the Raises.com podcast capital markets episode with Tre Brown, Head of Capital Markets at Raises.com; collected on acquisition financing benchmarks 2026
- July 2026 Texas HVAC transaction: https://raises.com/podcast/cody-sechelski-texas-hvac-rollup
- BizBuySell Insight Report, Q2 2026: https://www.bizbuysell.com/insight-report/
- BizBuySell Insight Report interactive data, active and closed: https://www.bizbuysell.com/news/insight-interactive
- BizBuySell Insight Report data tables, full-year 2025 by sector: https://www.bizbuysell.com/insight-report-data-tables
- BizBuySell, a CPA's guide to seller's discretionary earnings: https://www.bizbuysell.com/learning-center/article/cpa-guide-sellers-discretionary-earnings/
- BizBuySell Finance Center: https://www.bizbuysell.com/finance-center/
- BizBuySell terms of use: https://www.bizbuysell.com/terms-of-use/
- SBA Information Notice 5000-880695, Issuance of SOP 50 10 8.1: https://legacy.sba.gov/document/information-notice-5000-880695-issuance-sop-50-10-81
- SOP 50 10 8.1, Lender and Development Company Loan Programs: https://legacy.sba.gov/document/sop-50-10-lender-development-company-loan-programs