• You do not need $1.2M to buy a $1.2M business. Almost nobody pays cash.
• The standard structure: you bring about 10% of the price. On $1.2M, that is $120K.
• A bank lends the rest under the SBA 7(a) program, backed by a federal guarantee. That guarantee is why a bank will lend this much against a small business.
• Often the seller carries a slice too, a seller note, which means they are betting on you succeeding. A common split is 10% you, 10% seller, 80% bank.

• SBA 7(a) is the loan most self-funded searchers use. Here is the whole thing in ninety seconds.
• Up to $5 million, over 10 years, at a rate that floats with prime. You bring at least 10% in cash, and most lenders like to see 10% to 15%.
• Lenders generally want a 680 or better credit score, relevant experience, and a business that covers its debt at 1.25x. Anyone owning 20% or more signs a personal guarantee.
• From a signed LOI to a funded loan usually takes 60 to 90 days. Answer your lender within 24 hours and you stay at the short end of that.

Program terms as published in our SBA guides, September 2026. Lenders add their own requirements on top of the SBA minimums.

• Here is where I see people get stuck. They find a good deal, then struggle with the financing, because they budgeted for the down payment and nothing else.
• The down payment on a $1.2M business is $120K.
• You also need working capital: the buffer that goes into the deal so the business can make payroll and carry receivables in month one. You may or may not be able to roll it into the loan. Ask your lender early.
• Budget roughly $15K to $25K in legal, diligence and lender fees for every serious attempt. A deal that dies in diligence still takes all of it.
• All in, plan on roughly 13% to 16% of the price in cash, not 10%. And if you searched full-time, your runway has been draining the whole time.

Commonly quoted ranges for deals of this size. Working capital needs vary widely with how the business bills and gets paid: a contractor who waits 60 days for payment needs far more than a cash business.

• If you get an SBA loan, which most smaller self-funded searchers will, you're going to sign what's called a personal guarantee.
• A personal guarantee means you are signing your name against that loan, and it follows you wherever you go. If the business cannot pay, the lender can look to you.
• So you have to have confidence in yourself that you can execute on that business, and that you've done your proper due diligence. It's not a responsibility to take lightly.
• There are a few workarounds. One: raise enough capital to go after a larger business with a conventional loan, which may not need a personal guarantee.
• Two: personal guarantee insurance. It is a real product, and one of our partners, Ink, offers it to acquisition buyers.

• SBA plus your own cash covers most deals up to about $5M. It is not the only way to pay.
• Seller notes show up at almost every size. A seller who finances part of the price is telling you they believe the numbers.
• Above a few million, investors start to appear: you keep a meaningful share and they put in most of the equity.
• Conventional bank loans take over where SBA stops. Different rules, more equity, sometimes no personal guarantee.
• Retirement savings can be rolled into a deal as equity at any size. The rollover takes weeks to set up, so it belongs before the search, not after you sign an LOI. Structuring and Financing the Deal goes deep on all five.