SBA 7(a) Business Acquisition: Complete Timeline & Process Guide for Sellers (2025)

A comprehensive guide for online business sellers navigating the SBA 7(a) acquisition process - what happens, when, and what can go wrong

The Complete SBA 7(a) Seller’s Guide: What to Expect When Your Buyer Needs SBA Financing

You just received an offer on your business that depends on SBA financing.

This guide explains the timeline, what happens when, and what you’ll wait for. Most SBA acquisitions take 45-90 days from accepted offer to closing. Understanding each phase helps you stay patient when things feel slow—especially during the final stretch when all documents are in and you’re waiting for the bank to schedule closing.

SBA loans require more verification than cash deals. Lenders must prove your business can support the debt and that the price is justified. Everyone wants the deal to close; the process just takes time.

Quick Navigation

📅 The Timeline (Start Here)

🎯 Key Concepts

📋 Quick Reference

The typical SBA acquisition follows four distinct phases:

PHASE 1: Initial Submission (Days 1-7)
→ Buyer submits full package to bank
→ Bank responds with proposal in 24-48 hours
→ Buyer signs proposal + pays deposit ($2,500-$5,000)
→ Bank requests underwriting documents

PHASE 2: Underwriting (Weeks 1-4)
→ Bank assigns to underwriter (once ALL docs received)
→ Underwriting takes 1.5-3 weeks
→ Credit committee reviews and approves
→ Commitment letter issued within 24-48 hours

PHASE 3: Closing Preparation (Weeks 4-8)
→ Buyer signs commitment letter
→ Bank assigns closer within 1-3 days
→ Closing requirements distributed
→ Purchase agreement negotiated (often the biggest delay)
→ Insurance, legal docs, lien searches completed
→ Takes 3-5 weeks on average

PHASE 4: Final Approval & Closing (Weeks 8-10)
→ All closing needs delivered to bank
→ SBA E-Tran authorization requested (~1 week before closing)
→ E-Tran authorization received (24-48 hours for PLP, 10-20 days for non-PLP)
→ Bank prepares documents and assigns closing date
→ Closing and funding

What sellers miss: The bank won’t schedule a closing date until nearly all requirements are met AND they have final SBA E-Tran authorization (24-48 hours for PLP banks, 10-20 days for non-PLP). This is why Phase 3-4 feels slow—they’re waiting on multiple third parties (lawyers, insurance, SBA) before they can commit to a date.

Phase 1: Initial Submission (Days 1-7)

Day 1-2: Buyer submits to bank

Your buyer (or their broker) submits a complete package to the bank. If everything is included, the bank typically responds with a loan proposal within 24-48 hours.

Day 3-5: Buyer accepts proposal

The buyer signs the proposal and pays a good faith deposit ($2,500-$5,000, fully refundable if not approved). This deposit covers all third-party reports including valuation, background checks, and lien searches. The bank then requests additional underwriting documents within 24-48 hours.

Documents needed at this stage:

  • 3 years of business tax returns
  • 12-24 months of P&Ls with add-back documentation
  • Bank statements matching reported revenue
  • Platform analytics (Stripe, Shopify, etc.)
  • Customer/vendor contracts (if applicable)
  • Asset list (equipment, software, IP)

Note: The file won’t get assigned to an underwriter until ALL documents are received. Incomplete submissions cause the biggest delays in this phase.

Your job: Provide documents immediately. Every day of delay here extends the entire timeline.

Phase 2: Underwriting (Weeks 1-4)

Week 1-2: File assigned to underwriter

Once ALL documents are received (not before), the bank assigns the file to an underwriter. The underwriting process takes 1.5-3 weeks depending on bank backlog and time of year.

What underwriting verifies:

  • Reconciles bank deposits to platform reports and tax returns
  • Calculates debt service coverage ratio (DSCR) - needs to be 1.25x or higher
  • Reviews add-backs for legitimacy
  • Assesses concentration risk (customers, platforms, traffic sources)
  • Orders third-party valuation (takes 2-4 weeks)

During underwriting: The underwriter may request additional documentation. Respond quickly—delays here extend the timeline.

Week 3-4: Credit committee approval

Once underwriting is complete, the file goes to the credit committee for decision. This typically happens within 24-48 hours (sometimes same day).

If approved, the bank issues a commitment letter—usually within 24 hours of approval.

Your job: Respond to any follow-up questions immediately. The faster the underwriter gets answers, the faster they can finish.

Phase 3: Closing Preparation (Weeks 4-8)

This is where most sellers are when they feel stuck.

Week 4-5: Commitment letter signed

The buyer receives and signs the commitment letter. Within 1-3 days, the bank assigns a closer who provides a detailed list of closing requirements.

Week 5-8: Gathering closing requirements

This phase takes the average buyer 3-5 weeks. Here’s what’s being gathered:

The three biggest delays (in order):

  1. Legal documentation / Purchase agreement - Often endlessly negotiated between attorneys. This is frequently THE bottleneck.

  2. Insurance requirements - Specific coverage amounts and policy types required by the lender.

  3. Clean verifications - Tax transcripts, lien searches, background checks must come back clean. Issues here cause delays while they’re resolved.

Also required:

  • Updated financial statements
  • Final business documentation
  • Entity documents and licenses

Why it feels endless: You’ve delivered everything on your end, but the buyer, their attorney, and various third parties (insurance, etc.) are all working through requirements. The bank cannot schedule closing until nearly everything is complete.

What you can do:

  • Keep operating normally—performance matters until the wire hits
  • Update your buyer weekly with current metrics
  • Push back gently if attorneys are dragging their feet on the purchase agreement
  • Ask your broker: “What specific items are still outstanding?”

Red flags:

  • Purchase agreement negotiations extending beyond 2 weeks
  • Radio silence for more than 7 days
  • Changing terms that weren’t in the commitment letter

Phase 4: Final Approval & Closing (Weeks 8-10)

Week 8-9: Everything is delivered

Once the buyer, seller, and all third parties have delivered ALL closing needs to the bank, the final SBA authorization process begins.

With PLP banks: Even though PLP banks have delegated approval authority, they still must pull final authorization from the SBA E-Tran system before closing. This authorization verifies eligibility, ownership, and provides final confirmation of the SBA guarantee. Most lenders request this about a week before closing, and it typically takes 24-48 hours to receive. The bank cannot close without this authorization.

With non-PLP banks: The full loan package must be submitted to the SBA for review and approval. Expect 10-20 business days (sometimes longer—the SBA timeline is unpredictable).

Important: The bank will NOT schedule a closing date until they have final SBA E-Tran authorization and nearly all conditions are met. Even with PLP banks, this means waiting until about a week before the anticipated closing to pull authorization, then another 24-48 hours to receive it. This is why you can’t get a firm date earlier in the process.

Week 9-10: Closing is scheduled

Once the bank receives SBA E-Tran authorization (24-48 hours for PLP banks, up to 10-20 days for non-PLP banks), they prepare closing documents and officially assign a closing date.

Closing day:

  • Review and sign all documents (2-4 hours typically)
  • Verify wire instructions multiple times—scams targeting wire transfers are common
  • Transfer assets (domains, accounts, vendor relationships)
  • Begin transition support per your purchase agreement

Funding:

  • Same-day funding is possible but rare
  • More commonly: wire arrives within a few days after closing
  • The bank releases funds once they confirm all final conditions are satisfied

Your job: Show up, sign everything, triple-check wire instructions, and begin the transition you’ve planned.

Typical timeline to close: 45-90 days from when the buyer first submits to the bank. The faster deals (45-60 days) happen when all documents arrive immediately and attorneys don’t drag out purchase agreement negotiations. Most deals take 60-90 days due to normal delays in document gathering, attorney negotiations, and third-party verifications.

Essential Vocabulary

SBA 7(a): The government’s primary loan program for business acquisitions. The SBA guarantees 75% of loans over $150k, encouraging banks to lend.

SDE (Seller’s Discretionary Earnings): Cash flow available to a new owner. Includes net income plus your salary plus legitimate business expenses that are personal in nature.

DSCR (Debt Service Coverage Ratio): The ratio lenders use to confirm affordability. Takes SDE, subtracts a market salary for the buyer, divides by annual loan payment. Must be 1.25x or higher.

Add-backs: Personal or one-time expenses removed to show true operating profit. Each needs documentation.

PLP (Preferred Lender Program): Experienced SBA lenders with delegated authority to approve loans without full SBA review. However, even PLP lenders must pull final authorization from the SBA E-Tran system before closing (typically 24-48 hours, requested about a week before closing). This authorization verifies eligibility and confirms the SBA guarantee.

Standby Note: Seller financing paused for a defined period. New rules require full standby for the life of the SBA loan when it counts toward buyer’s down payment.

Common Risks That Disrupt Deals

1. Declining Performance

If revenue drops during diligence, confidence erodes quickly. Keep marketing and operations running normally throughout the process.

2. Valuation Shortfall

The independent valuation may come in below your price. If it does, the lender can only fund up to the appraised amount. You’ll need to negotiate—either adjust the price, increase buyer down payment, or add seller financing.

3. Documentation Gaps

When bank statements, tax returns, and platform reports don’t match, the process stalls. Reconcile everything before diligence begins.

4. Platform Issues

Account suspensions on Amazon, Google, or other platforms raise red flags. Notify your buyer immediately and show how you’re resolving it.

5. Owner Dependency

If you handle all critical functions, lenders worry the business can’t transfer smoothly. Document your processes and show the business can run without you.

Key Truths for Sellers

  1. Plan for 45-90 days. The fast deals (45-60 days) are rare. Most take 60-90 days.
  2. Files don’t get assigned to underwriters until ALL documents are received.
  3. The three biggest delays: purchase agreement negotiations, insurance requirements, and unclean background checks.
  4. Banks won’t schedule closing until they receive SBA E-Tran authorization (24-48 hours for PLP, longer for non-PLP) and nearly all conditions are met.
  5. Phase 3 feels slow because you’ve done your part—now the buyer and third parties catch up.
  6. Keep operating normally—performance matters until the wire hits.
  7. Most deals that reach the commitment letter stage close successfully.
  8. Attorney negotiations on the purchase agreement are frequently THE bottleneck.
  9. Respond to every request within 24 hours. Every delay compounds.
  10. Expect 60-90 days for most deals. Faster is possible but requires perfect execution from everyone.

Essential FAQ

“Can we close in 30 days?”

No. Even with perfect documentation and a PLP lender, 45 days is fast. Plan for 45-90 days, with most deals closing in the 60-90 day range.

“What’s happening during Phase 3?”

The buyer is working through closing requirements with their attorney and insurance agent. The purchase agreement is being negotiated. The bank is coordinating third-party verifications. You’ve done your part—now you wait for everyone else.

“Should my buyer use an SBA broker?”

Yes. Brokers know which lenders understand your business model and can speed up the process. Their fee (1-2%, paid by buyer) usually saves more time than it costs.

“When do I tell my team?”

Most sellers notify key people 2 weeks before closing. Broader announcements happen the week of closing.

“What kills deals?”

Declining performance, poor communication, and documentation gaps. Keep operating normally, respond quickly, and stay in touch weekly.

Final Thoughts

The SBA process asks one question: Can a new owner operate this business while servicing debt at 10-15%?

That’s why lenders focus on documentation, systems, and dependency risks. They’re not questioning your work—they’re verifying the business can transfer smoothly.

What to expect:

  • Documents requested multiple times
  • Valuation potentially below your price
  • Long waits with nothing to do (Phase 3)
  • Weekly check-ins that feel repetitive

What to remember:

  • Most deals that reach Phase 3 close successfully
  • Everyone wants this deal to work
  • Communication matters more than perfection
  • Patience is your best tool

You’ve built something valuable. Now you’re handing it off. This process proves the business can thrive without you—that’s the point.

Thousands of sellers complete this journey every year. With preparation and persistence, you will too.