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WASHINGTON – Military veterans buying an existing small business with an SBA 7(a) loan will be able to fund their entire required 10% equity contribution from permitted outside sources starting Wednesday, November 11, under a policy the Small Business Administration announced Monday.
The 10% equity requirement is not being eliminated. The change removes the previous limit that allowed certain outside sources to cover no more than half of that contribution. Eligible veteran buyers can instead raise the full required amount from permitted sources through fiscal year 2027.
In its November 9 policy announcement, SBA said the 7(a) program requires an equity contribution of at least 10% of total project costs when a buyer acquires an existing business. The agency identified seller standby notes, investor capital and external equity contributions among the outside sources previously subject to the half-contribution cap.
For a veteran considering an acquisition, the change is about where the equity comes from, rather than reducing the amount of equity the transaction needs. It creates more room to combine permitted financing sources and preserve personal savings for operating the business after the purchase.
The policy begins on Veterans Day and applies to eligible veteran buyers acquiring existing businesses through the 7(a) Loan Program. The announcement does not extend the change to every borrower or every type of SBA loan.
The acquisition policy was one of several measures SBA announced at the start of National Veterans Small Business Week. In a separate contracting announcement, the agency set fiscal year 2027 agency-level goals of 10% each for prime contracting and subcontracting with veteran-owned and service-disabled veteran-owned small businesses, up from 5%. These are contracting goals, not guaranteed awards to individual businesses.
SBA also announced a $500,000 national pilot with VetsinTech for veteran entrepreneurs in drones and aerospace. The amount funds the pilot; it is not a $500,000 payment to each participating company.
The pilot aims to reach 1,000 military-connected individuals, select approximately 100 early-stage ventures for regional cohorts and provide scale support to 25 established companies. Those are program targets. Planned services include business training, financing support, investor connections and help pursuing federal procurement opportunities.
JBizNews Desk | Washington
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