SBA Hot Topic Tuesday: SBA Drops the 9:1 Debt-to-Worth Test for Owner Buyouts
August 25, 2026
Bob Coleman
Founder & Publisher
SBA Hot Topic Tuesday: SBA Drops the 9:1 Debt-to-Worth Test for Owner Buyouts
SOP 50 10 8.1 draws a sharp distinction between Initial Acquisitions and the other change-of-ownership categories.
Beginning October 1, an Initial Acquisition still requires a 10% equity injection. SBA is explicit: that requirement cannot be reduced or eliminated.
Business Expansions and Owner Buyouts are different.
SBA also starts those transactions with a 10% equity injection, but the lender may reduce or eliminate the requirement if it determines the borrower has sufficient liquidity and working capital to sustain operations following the transaction.
For Owner Buyouts, that replaces the fixed 9:1 debt-to-worth test lenders use today.
The lender now makes the decision based on the borrower’s liquidity and working capital.
That replaces today’s objective 9:1 test with a lender credit decision.
SBA does put limits around that discretion.
If the lender reduces or eliminates the equity injection, the applicant cannot have negative net worth as of the last fiscal year-end.
If the lender eliminates the injection entirely, permanent working capital cannot be included in that loan or another 7(a) term loan request within 90 days. Any working capital needed to support the transaction must come from existing cash or a line of credit.
The change is specific: the 9:1 threshold no longer determines whether an Owner Buyout qualifies for a reduced or zero equity injection. The lender does.
Lance Sexton will cover this change and the rest of the new Appendix 15 requirements in our SOP 50 10 8.1 Comprehensive Review on Thursday, August 27, with a repeat session September 22.
He will walk through the new change-of-ownership categories, equity requirements, DSC standards, Quality of Earnings and what lenders need to change before October 1.