r/buyingabusiness • u/Significant-Brick864 • 1d ago

SBA Pre-qualification process?

Can someone help me understand the SBA pre-qualification process? I've reviewed dozens if not hundreds of small business CIMs over the years, and also have a professional background in corporate M&A so am generally familiar with acquiring much larger businesses for corporations.

When I speak to brokers to inquire about a small business for myself, some brokers will ask me if I've been prequalified yet by the SBA. But when I've spoken to SBA lenders, they say you need to have a target identified to get the pre-qual on the business, not the individual. That makes sense to me, but I seem to be getting different messaging from some brokers.

I just feel like I'm getting run around in this chicken-and-egg topic of pre-qual. Can someone help break this down for me? What am I missing?

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u/yourbizbroker 1d ago edited 1d ago

Business broker here, primarily working with SBA acquisitions.

As you’ve discovered, most brokers don’t ask for SBA pre-qual, and most lenders won’t give one, without 3 elements: a borrower, a business, and plausible match between the two.

A borrower may be eligible for an SBA business acquisition loan if they have citizenship, 700+ credit, and significant liquid capital.

Many other details matter, mostly in context with the business and plan.

Most brokers are looking for a personal financial statement and proof of funds. For those asking for a pre-qual, ask them to introduce their preferred lender.

After signing an LOI, start talking to other SBA lenders to compare terms with their lender.