Partner Buyout Loans
Partner buyout loans fund the purchase of a co-owner's equity stake in your existing business. Up to $5M via SBA 7(a) with 10% down, preserving operational continuity while consolidating ownership and decision-making authority.
About Partner Buyout Loans
Partner buyout loans finance the purchase of an outgoing partner’s equity stake in an existing business. This typically occurs during retirement, divorce, estate planning, or when partners disagree on strategic direction. The SBA 7(a) program is the most popular vehicle because it allows up to $5 million at 10% down with 10-year amortization. The remaining owner(s) consolidate control while maintaining all operational continuity — employees, customers, suppliers, and contracts are unaffected.
Key Features & Benefits
Everything you need to know about what makes Partner Buyout financing a smart choice.
Consolidate Ownership
Become the majority or sole owner of the business you’ve built with your partner(s).
10% Down via SBA 7(a)
Finance 90% of the buyout price with SBA — preserving your working capital for operations.
Seller Note Allowed
Seller note up to 20% (fully standby 24+ months) can count toward equity injection.
10-Year Term
Long amortization minimizes monthly payment impact on cash flow.
Operational Continuity
Employees, customers, contracts, and operations unchanged — just ownership restructured.
Tax-Advantaged Structure
Interest on the acquisition debt is typically deductible; stock vs. asset structure affects selling partner taxes.
Who Uses Partner Buyout Financing
- Retiring partner selling equity to remaining active partner(s)
- Divorce settlement requiring spouse’s business interest buyout
- Estate planning — buying out deceased partner’s family
- Strategic disagreement resolution via majority takeover
- Key employee promotion to partnership (reverse buyout)
- Buyout of silent/passive investor to simplify capital structure
Qualifications & Eligibility
- Business in operation 3+ years with demonstrated profitability
- Remaining owner(s) must own 50%+ after the buyout
- Remaining owner(s) must have operational experience
- Credit score 680+ preferred
- DSCR of 1.25x+ after the new debt service
- Business valuation supporting the buyout price
- Clean departure — non-compete and transition agreements in place
How It Works
Our streamlined process gets you from application to funding quickly.
Business Valuation
Third-party or lender-commissioned valuation establishes fair market value of the business and the partner’s share.
Buy-Sell Agreement Review
Review existing partnership/operating agreement for buy-sell provisions, formulas, and triggers.
Financing Structure
Typical structure: 10% buyer equity + 20% seller note (standby 2+ years) + 70% SBA 7(a) loan.
SBA Underwriting
SBA-preferred lender underwrites against business cash flow — typical timeline 45–60 days.
Closing
Coordinated closing with purchase agreement, financing, seller note, and governance changes.
Why Choose Growth Fund Partners for Partner Buyout
Frequently Asked Questions
Common questions about Partner Buyout loans answered.
Can I use SBA 7(a) to buy out a partner?
Yes — partner buyouts are an approved SBA 7(a) use. Remaining owner(s) must hold 50%+ after the buyout, and the SBA guaranty covers up to 90% of the buyout price.
Can the selling partner stay involved?
SBA requires the selling partner exit operationally (no employment or consulting role beyond a short transition period) to qualify for the 90% financing structure.
How do you value the partner\u2019s stake?
A third-party business valuation (EBITDA multiple, comparable sales, asset-based, or blended) is required. Many partnership agreements have predetermined buyout formulas.
Can the seller carry a note?
Yes — seller notes up to 20% of the price are common and can count toward the required equity injection if they\u2019re fully standby (no payments) for 24+ months.
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