Partner Buyout
Buy out your partner, with little or no additional money down
When one partner wants to buy out the other, an SBA loan can finance the whole thing. Because you already own part of the business, your existing stake can reduce the cash you need to bring, and with the right lender it can eliminate the additional down payment entirely.
The departing partner is paid at closing, you take full ownership, and the firm keeps running. This is one of the cleanest transitions in a professional services firm.
The SBA leaves the down payment on a partner buyout to the lender, and we work with banks that recognize your existing ownership.
Why Partner Buyouts Are Different
Your existing ownership is your equity
In an outside acquisition, the buyer has to fund a full equity injection because they are starting from zero. A partner buyout is different. You already hold a stake in the firm, you already know the clients and the numbers, and you are already proven to the business.
Lenders can recognize that. The SBA sets no fixed down payment for a change of ownership between existing owners, leaving it to the bank, and the bank can treat your current equity as part or all of what is required. That is what makes a low or no additional down payment possible.
How It Works
A partner buyout, start to closing
The path is short because the buyer is already an owner. Here is the sequence.
01
Value the firm and the stake
A professional valuation sets what the whole firm is worth and what the departing partner's share is worth, on historical cash flow the bank will lend against.
02
Structure the financing
An SBA 7(a) loan funds the buyout. Because the buying partner already owns part of the business, their existing equity can reduce or, with the right lender, eliminate the additional cash required.
03
Close and continue
The departing partner is paid at closing, the remaining owner takes full control, and the firm keeps running without missing a beat.
Rates and Terms
Predictable financing, paid at closing
The rate on an SBA acquisition loan reflects the bank's cost of funds plus risk, up to the SBA ceiling of Prime plus 2.75 percent floating. Terms run up to 10 years, fully amortizing, with no balloon payment.
The result is a clean handoff. Your partner receives their proceeds in cash at closing rather than waiting on installments from you, and you repay the bank out of the firm's cash flow. The same structure powers our Step-Up Legacy Plan and our employee buyouts.
Partner Buyout FAQ
Common questions about buying out a partner
- Can I buy out my business partner with an SBA loan?
Yes. An SBA 7(a) loan is a common way to finance a partner buyout. The loan pays the departing partner in cash at closing, and the remaining owner repays it out of the firm's cash flow over time, typically on a 10-year term.
- Do I need a down payment to buy out my partner?
Often less than you would expect, and sometimes none. The SBA leaves the equity injection on a partner buyout to the lender. Because you already own part of the business, your existing stake can count toward the requirement, and we work with a bank that can allow a qualifying partner buyout with no additional money down. The exact terms depend on the lender and the deal.
- How is a partner buyout different from an outside acquisition?
You already own part of the firm and know it inside out, so there is far less risk for a lender than an outside purchase. That existing ownership and knowledge is what can reduce or eliminate the additional cash you need to bring.
- How long does a partner buyout take?
Typically 3 to 6 months from the point you and your partner are ready to move, depending on how quickly financials are prepared and the lender processes the loan.
- What size firm does this work for?
This fits firms with sales between $1 million and $10 million, the same range where our SBA-financed employee buyouts work best. The firm needs enough cash flow to cover the loan payments comfortably.
Ready to Take Full Ownership
See what buying out your partner would take
Tell us about your firm and your partnership. We will show you how an SBA-financed partner buyout could be structured, including how much, if anything, you would need to put down.