SBA Lets Veterans Use Outside Sources for the Full 10% Down Payment on Existing Business Purchases

Veterans buying an existing business through the U.S. Small Business Administration’s 7(a) loan program can now use permitted outside sources for their entire required down payment, the SBA said on Nov. 9, 2026. The change takes effect on Veterans Day, Nov. 11, and stays in place through Fiscal Year 2027. The agency issued it as Release 26-117 on the first day of National Veterans Small Business Week.

The same day, in Release 26-116, the SBA said it had doubled its federal contracting goal for veteran-owned small businesses to 10%. SBA Administrator Kelly Loeffler is quoted in both releases.

What Changed for Veteran Buyers

Buyers of existing businesses must contribute equity equal to at least 10% of total project costs. According to the release, certain outside funding sources, including seller standby notes, investor capital and external equity, could previously cover no more than half of that amount.

The release names seller standby notes, investor capital and external equity contributions as examples of outside sources. It describes the new policy as allowing veterans to raise the full amount from permitted outside sources.

Veterans can fulfill the total 10% acquisition equity requirement through permitted outside funding sources. The release says veterans may keep their personal savings and liquidity to support operations after the purchase, instead of putting that money into initial transaction equity.

The release lists three benefits: fuller flexibility in how a deal’s capital is structured, preserved personal savings for running the business after closing, and a better ability to acquire Main Street businesses.

Loeffler said the SBA saw a clear opportunity to empower veteran entrepreneurs and to address the ‘Silver Tsunami.’ She also said the SBA has worked to modernize its lending programs. Citing its Office of Advocacy, the SBA says 51% of owners of businesses with employees are age 55 or older.

Owners of Businesses With Employees
The SBA’s release says 51% of owners of businesses with employees are 55 or older, citing its Office of Advocacy.

How the Change Sits Beside SOP 50 10 8

The release describes the earlier half limit as applying to certain outside funding sources. Windsor Advantage’s summary of SOP 50 10 8, which took effect on June 1, 2025, describes the same half limit for seller notes. Under that summary, a seller note must be on full standby for the life of the SBA loan, with no principal or interest payments. The note can be repaid once the SBA loan is paid in full, and it cannot cover more than half of the required equity. If 10% is required, a seller note can cover up to 5% of total project cost.

The summary says the note should ideally be documented on SBA Form 155 or an equivalent. It also says SOP 50 10 8 largely reinstates principles that were in place before 2021.

The summary sets the minimum equity for start-ups and complete changes of ownership at 10% of total project costs, and describes that minimum as mandatory. That figure covers all costs needed to become operational or to complete the change of ownership. For partial changes of ownership, less than 10% may be allowed if the debt-to-worth ratio was not greater than 9:1 beforehand. Otherwise, owners must contribute cash to reach a 9:1 ratio or 10% of the purchase price, whichever is lesser.

The summary says the earlier flexible sourcing approach has been eliminated. Acceptable sources include unborrowed cash, cash from personal loans with outside repayment sources, grants without repayment or clawback requirements, non-cash assets with proper valuation, and verified prepaid expenses.

A home equity line of credit is not eligible unless the borrower has enough outside income to service it. Income from the business itself can no longer support that repayment.

The summary says lenders are expected to make reasonable efforts to verify that equity is injected and used as intended. The summary lists checks, wire transfers, bank statements showing available funds for at least 30 days, settlement statements, paid invoices and account statements showing use of funds. It says promissory notes or gift letters alone are not sufficient.

The summary says phased buyouts, step transactions and incremental ownership transfers are no longer allowed for SBA financing, and all ownership transfers must close in a single closing.

Veteran Contracting Goal Rises to 10%

Release 26-116, dated Nov. 9, 2026, sets the Fiscal Year 2027 prime contracting goal for veteran-owned and service-disabled veteran-owned small businesses at 10%. The release describes the combined prime and subcontracting goal as doubling from 5% to 10%.

The release also sets FY 2027 goals for other categories. Small disadvantaged businesses and women-owned small businesses each have a 5% goal for prime contracts and a 5% goal for subcontracting. HUBZone businesses have a 3% goal for both.

The release points to recent results. In FY25, the government exceeded the 5% SDVOSB goal with $32.5 billion in prime contracts awarded to service-disabled veteran-owned small businesses. The SBA says it cleared a backlog of more than 2,700 VetCert applications last year, and in FY26 it approved over 18,000 contracting certifications for veteran-owned small businesses.

The release says the SBA has prioritized SDVOSB certifications. It describes veteran entrepreneurs as often serving as key suppliers to the defense industrial base, and Loeffler said small businesses make up 70% of the industrial base in the defense industry. It also notes a statutory target of at least 23% of federal prime contracting dollars for small businesses, which the government has exceeded for eleven consecutive years.

The SBA says it works with federal agencies to set prime and subcontracting goals. It will measure progress through its annual Small Business Procurement Scorecard, which the agency describes as a way to promote transparency and hold agencies accountable. Loeffler said veteran entrepreneurs deliver products and services that support Main Streets and military readiness.

Veterans can fulfill the total 10% acquisition equity requirement through permitted outside funding sources.

Timing and What Comes Next

The SBA issued both releases on Nov. 9, 2026. As of Nov. 11, 2026, the equity change is in effect for eligible veteran buyers of existing businesses, and the SBA says it stays in place through FY27.

The contracting goal applies to FY 2027. The SBA says it measures progress against it through its annual Small Business Procurement Scorecard.

For loans under SOP 50 10 8, the Windsor Advantage summary sets the equity rules, including the verification standard and the single-closing requirement described above.

The release directs readers to www.sba.gov/veterans for more information.