How much cash to buy a business? At least a tenth of the total.
With an SBA loan, you bring at least 10% of the whole project: the price plus working capital and closing costs. From October 1, 2026 a lender cannot lower that on a first purchase, and the bank lends most of the rest. Set a price, see your number.
It does not all have to be your own cash. A seller note on full standby or a small partner's equity can carry up to half of it, and gifted funds can help. The four sources are below, and the no-money-down question has its own honest answer.
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Roughly 10% of the total project, not just the price
SBA lenders expect the buyer to put real skin in the game, and the rule is an equity injection of at least 10% of the total project cost, which from October 1, 2026 a lender cannot reduce on a first purchase. Note the wording. The project is not just the purchase price. It is the price plus working capital, closing costs, and fees, which is the number the lender actually finances. The injection rule and what counts toward it are set out in SOP 50 10 8, the SBA's lender manual, and its October 2026 update, 8.1, makes the 10% a hard floor for a first-time purchase that a lender cannot reduce.
Work it on a $2M deal. Add working capital and costs and the total project might land near $2.2M, which puts the injection around $220K. Call it $200K and change as your planning number. The rest arrives as SBA-backed debt, typically a 7(a) for the business itself, with a 504 alongside it if real estate is part of the purchase.
Here is the part most buyers miss: that $200K does not all have to be cash out of your brokerage account. The SBA allows several sources, each with a catch a lender will check.
Four sources lenders accept, and the catch on each
Your own cash. The cleanest source. The catch is seasoning: lenders want to see the money sitting in your accounts over time, not appearing the week before closing. A sudden deposit triggers sourcing questions.
A seller note on full standby. The seller carries part of the price as a note, and if that note is on full standby, no payments of principal or interest for the whole term of the SBA loan, it can count toward up to half of your injection. The catch is drafting. A note that pays anything before the SBA loan is repaid, even interest, even after a two-year pause, is not on full standby and does not count, and lenders read the terms line by line. Get it right in the offer letter, not in a panic before closing.
Gifted funds. A gift from family counts with a signed gift letter and documentation showing where the money came from. The catch is that a gift with strings attached is a loan wearing a costume, and underwriters know the costume.
Partner equity. Bring in a partner who contributes capital for ownership. The catch is paperwork: the ownership split, the operating agreement, and who signs the personal guaranty all have to line up with SBA rules. Anyone who ends up owning 20% or more signs an unlimited personal guaranty, and money from a minority investor counts toward only half of the required injection.
What does not count: money borrowed against the business or the deal. Lenders trace every dollar of the injection to its source, and a credit line draw or an undocumented pile of cash fails the test. The one borrowed source the SBA accepts is a personal loan to you as guarantor that you can show you repay from income outside the business (a salary from the business you are buying does not count). This is the classic three-days-before-closing deal-breaker.
More injection means less debt, and easier coverage
The injection is not just a gate to clear. It is a lever on the whole deal. Every dollar you inject is a dollar the business does not have to borrow, and less debt means lower payments and a stronger debt service coverage ratio. Most lenders hold a DSCR floor of 1.25, and a deal that barely scrapes it on generous addbacks dies in committee, which is why we structure to 1.40 or better on defensible earnings.
So if a deal pencils thin at 10% down, a larger injection or a properly structured seller note can move the coverage from marginal to fundable. The injection, the note, and the DSCR are one system. Change one and the other two move.
Do not drain your working capital to hit the number
The most common self-inflicted wound: a buyer scrapes every account to reach the injection and takes the keys with nothing left to run the company. Payroll hits in week two. A big customer pays in 45 days. The business that looked fine in the model is suddenly gasping, not because the deal was bad but because the buyer arrived broke.
The fix is to size the project honestly. Put working capital inside the loan, keep a personal reserve outside the deal, and if the cash is not there, bridge the gap with a compliant seller note instead of your last dollar. A buyer with $250K should not stretch for a deal that needs all $250K at closing. Structure exists so you do not have to.
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