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SBA 7(a)

By Jason Taken, business broker · HedgeStone Business Advisors · Updated 2026-09-04 · 1 min read

SBA 7(a) is the U.S. Small Business Administration's primary loan guaranty program, used to finance business acquisitions, equipment, leasehold improvements, working capital, and eligible refinancing. The SBA guarantees a portion of a lender's loan rather than lending directly.

Why SBA 7 Matters in a Laundromat Sale

7(a) is how most laundromats at the median deal size get financed, so its rules shape the buyer pool whether or not a seller ever speaks to a lender. Current parameters: a $5 million maximum, guaranty up to 85% at $150,000 or less and 75% above, business-acquisition terms generally 10 years or less, and at least 10% of total project cost as equity injection on a complete change of ownership (Sources: SBA 7(a) Loans; SOP 50 10 8). SOP 50 10 8.1 is published but not effective until October 1, 2026.

Example

A $350,000 acquisition with $30,000 of closing costs and working capital is a $380,000 project. The minimum injection is $38,000. The lender, applying its own overlays, asks a first-time operator for $55,000 plus six months of personal reserves.

What to Check

  • Compute the injection on total project cost, not on purchase price.
  • Ask the lender for its own overlay requirements, which usually exceed the SBA minimum.
  • Confirm the lease term covers the loan term before spending money on diligence.

Where This Comes Up

  • SBA 504 — SBA 504 is a long-term
  • Equity Injection — Equity injection is the buyer's own money contributed to a financed acquisition
  • Standby Agreement — A standby agreement is a written undertaking by a creditor — usually a seller holding a note — to take no payments and enforce no remedies against the borrow...
  • DSCR (Debt Service Coverage Ratio) — DSCR, or debt service coverage ratio

See the full laundromat glossary for all 78 terms.

The Next Step

Sources

This page is general information about laundromat transactions, not legal, tax, or investment advice, and not a guarantee of sale price, timing, or financing approval. Verify current rules with your own CPA, attorney, lender, and the relevant state or municipal agency before acting.