Hey Reader

On June 1, the rules of the game change.

Not a tweak. Not a clarification.
A full tactical shift — one that will quietly kill hundreds of deals this summer, while buyers are still stuck wondering what happened.

The SBA just eliminated three of the most powerful weapons serious buyers had:

• Seller notes to reduce your cash at close
• Partial acquisitions that kept sellers involved without personal guarantees
• Asset purchases with rollover equity that protected buyers from hidden liabilities (and allowed sellers to remain on indefinitely)

Gone.
Off the board.
And if your deal relies on any of them?
You’re about to get trapped.

Unless you move first.

The Three Changes You Can't Ignore

Here’s the real story:

First, seller notes that used to count toward your 10% equity injection requirement?
Now they can only help if they’re on full standby for the life of the SBA loan — ten years - not the previously allowed 2 years of standby.

It used to be you could convince a seller to wait two years before collecting payments and get full credit.
Now? You’re asking them to tie up their cash for a decade.
Most will say no — and your down payment gap will blow wide open.

Second, partial acquisitions are effectively dead.
Under the old rules, a seller could keep 10% or 15% equity and simply walk alongside you for a few years, no personal guarantee required. If you need a qualifier for a license (like HVAC, plumbing, etc) great. Seller can be that licensee. Indefinitely.
Now?
If the seller keeps even 1% of the business, they must become a co-borrower and personally guarantee the entire SBA loan for two years.

Good luck convincing a retiring seller — who just spent twenty years protecting their personal assets — to PG your loan out of goodwill.

Finally, equity rollovers — the rare structure that let buyers do an asset purchase and still give sellers a sliver of ownership for long-term involvement — have been wiped out completely.

It’s either full buyout... or full shutdown.
No more hybrid models.
No more partial control with asset protection.

If Your Deal Has Any of These Features, You're Out of Time

This is black and white.

If your deal includes:

• A seller note you’re relying on to meet your 10% down
• A plan for the seller to keep any ownership stake
• An asset purchase with any form of equity rollover

You are officially on the clock.

You have exactly two options:

(1) Rush to get your SBA loan number issued before June 1, locking in the old rules.​
(Submission isn’t enough. You need the actual loan number assigned.)

(2) Restructure your deal immediately to fit the new world.

If you don’t?
Your deal will collapse in your hands — and no amount of scrambling will save it after the deadline hits.

How to Lock in the Old Rules (If You Still Have Time)

If you’re deep into diligence and close to final docs, there’s still a narrow window to beat the clock.

But it’s not enough to “get your application in.”
You need your lender to process, approve, and issue a formal SBA loan number before June 1.

That means:

• Bank underwriting complete (with internal approval)
• Completed purchase agreement (near-final at minimum)
• Lease agreement secured (or close to final)
• Proof of your equity injection ready to show
• Business insurance lined up
• Life insurance policy application submitted and in underwriting

Banks will be overwhelmed in May.
Choose wrong, and your file will sit while someone else’s deal gets processed.

If you’re serious about locking in the old rules, you need an SBA-specialist lender who can move fast and knows exactly how to package your deal for immediate approval.

No hand-holding.
No learning curve.

Anything less, and you’ll miss the cutoff — plain and simple.

How to Restructure Smart (If You Can’t Beat the Clock)

If you know you won’t make it in time, stop pretending otherwise.

The longer you delay restructuring, the colder your seller gets.
The faster you pivot, the better your chances of saving the deal.

Here’s what the smartest buyers are already doing:

Seller Notes Are No Longer Your Equity Crutch

Under the new rules, if you want seller financing to count toward your 10% equity injection, it must sit frozen — no payments — for the life of your loan.
Nobody rational ties up $300K+ for 10 years on handshake trust.

So you stop trying to force it.

Fund the full 10% yourself if you can.
Partner with investors if you can’t.
Or structure creative side payments — like a large consulting fee post-close or inflated rent payments — to get cash to the seller without violating the standby rules. Make sure your. lender is aware of this (and these two tactics are full above-board and I've personally worked deals that included them). DO NOT sign "side letter agreements" with sellers to avoid SBA rules.

In rare cases, you might still split the note: a tiny 5% standby note and a separate 10% performance note.
But don’t bet the deal on it.

Go in knowing the seller note will help you structure the economics, but won't save your down payment requirement anymore.

And frame it smart — position the creative payments as how you were able to offer full price in a tough environment.

Done right, sellers feel like they're getting the win — not the concession.

Seller Retained Equity: Dead — But You Still Need the Advantage

Partial acquisitions — where sellers kept a slice of the business post-close — used to be a powerful tool for serious buyers.
And not for vanity reasons.

Two tactical use cases drove almost every retained equity structure you saw:

First, licensing continuity.​
When a seller held a necessary professional license — HVAC, plumbing, electrical, specialized contracting — letting them retain a small ownership stake allowed them to legally stay on as the "qualifier" beyond 12 months.
You could buy the business, operate under their license, and phase in a replacement when ready.
Seamless. Controlled. Safe.

Second, price reduction.​
Partial acquisitions let buyers effectively buy less while sellers stayed financially invested.
If a seller retained 10% equity, your purchase price often dropped by 10%, easing financing burdens while keeping the seller motivated to support transition success.

Both strategies protected the deal — and the buyer.
Now?
They're gone under SBA.

After June 1, if a seller retains even a 1% stake, they must co-borrow and personally guarantee your loan for at least two years.
Most sellers will run from that.

So you pivot.

Licensing Continuity Problem? Solve it without equity.

You need the seller to stay on only as a consultant — for a maximum of 12 months — while you transition to a new qualified license holder.

That could mean:

• Recruiting a senior employee and funding their license upgrade
• Hiring an outside qualifier on a contract basis
• Using the seller’s 12-month consulting window to bridge the gap
• Seller can be qualifier (sometimes) but for no more than the 12 months post-closing, and you must have a plan in place after that (and ideally a backup plan during the 12 months).

Make sure to share your license continuity plan with your lender and get it approved in writing to avoid surprises later.

No equity.
No PG.
No loan compliance landmines.

Price Reduction Problem? Solve it through better structures.

You restructure the economics around non-equity levers:

• Larger Seller Notes: Ask for bigger seller financing with interest-only or ful standby periods. Cash flow wins without price cuts.
• Consulting Fees: Reallocate value through 12-month consulting contracts — sellers get paid post-close instead of upfront.
• Rent Discounts: If seller owns real estate, negotiate below-market rent for 2–3 years instead of purchase price discounts.
• Retention Bonuses: Use some savings to lock in key employees who protect the business’s cash flow and operations.

You still extract the same value.
You just do it without tripping SBA violations.

Equity Rollovers: Gone for Good

If you were planning to do an asset purchase with seller rollover equity — congratulations.
You now have no legal path to close that deal under SBA funding.

Sellers must cash out completely.

You can keep them engaged post-close through consulting gigs, advisory roles (up to 12 months, and you can pay well) — but not through ownership.

The only partial-ownership path would require sellers to PG your loan.
Almost no one will agree to that willingly.

So don’t force it.
Structure a clean buyout and move forward.

And if you’re worried about hidden liabilities (because you’re buying stock or membership interests)?
Mitigate with:

• Indemnity escrows
• Tail insurance
• Reps and warranties insurance coverage (where deal size supports it)

There’s always a tactical play.
You just have to know how to move the pieces.

Psychological Edge: How Smart Buyers Still Win

The rules are harder — but the smartest buyers will still win.

Why?
Because the game was never just financial.

It’s always been psychological.

Deals don’t close because spreadsheets make sense.
Deals close because the seller wants to close with you.

That’s why you:

• Build deep trust early
• Frame structural changes as SBA-driven, not your idea
• Anchor tougher options first, then offer your real preferred structure
• Focus on loss aversion ("You’re 90% there. Don’t lose it now.")
• Accumulate small commitments fast to lock in momentum

The faster you master deal psychology under these new rules, the more businesses you’ll own while everyone else is still complaining.

Final Word: Adapt or Die

You can hate the new rules all you want.
You can grumble about lost structures and harder money.

Or you can move smart, move fast, and buy the business that someone slower just lost.

This is how the best buyers win.

Blueprints, not blind bets.​
Information, not emotion.
Control, not hope.

Your move.

Eric

— Buyers Black Book

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