Briefing
Getting financed, and getting ready to sell.
What lenders need to say yes in 2026, where the money is when the bank says no, and why exit planning starts years before the sale.
What this covers
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What lenders need
The five things every underwriter checks, in plain terms.
2
Where the money is
Bank, SBA, USDA, local funds, and what changed in 2025.
3
When the answer is no
Alternatives, and the ones to avoid.
4
Getting ready to sell
Why three out of four businesses that go to market do not sell, and how to be the one that does.
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Lenders do not fund ideas. They fund evidence.
A bank is deciding whether the money comes back. Everything in the package either proves that or gets in the way.
The five things every lender checks
Cash flow
Does the business make enough to cover the payment with room to spare? Lenders want about $1.25 of cash flow for every $1 of debt payment
Collateral
What can be pledged: equipment, real estate, receivables. Since 2025, SBA loans over $50,000 must be collateralized
Credit
Personal and business scores and history. Explain any problem before they find it
Capital
Your own money in the deal. SBA now requires at least 10% equity on startups and ownership changes
Character
Experience in the industry, how you have handled past debt, and whether the plan is realistic
Bring three years of tax returns, year-to-date statements, a personal financial statement, a debt schedule, and a plan with projections.
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What changed in 2025: SBA rules got stricter
The SBA's new operating procedure took effect June 1, 2025, and rolled back the flexible rules of 2023 and 2024.
| Rule | What it means for you |
|---|---|
| 10% equity injection | Startups and business purchases need at least 10% of the project cost from the buyer, with the source documented |
| Collateral over $50,000 | Any 7(a) loan above $50,000 must be secured; the old threshold was $500,000 |
| Small-loan cutoff lowered to $350,000 | Loans above that get full underwriting; the minimum credit score for the streamlined path rose too |
| Tax transcripts verified | The IRS transcript must match the returns you submit, on every loan |
| Credit elsewhere test | Lenders check whether owners have personal resources that could fund the project instead |
Sources: Congressional Research Service, April 2025; SBA SOP 50 10 8
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Where the money is
| Source | Good for | What to know |
|---|---|---|
| Bank term loan or line of credit | Established businesses with collateral and history | Fastest and cheapest when it works; the community bank knows you |
| SBA 7(a) | Working capital, equipment, buying a business, up to $5 million | Bank loan with a government guarantee; longer terms, stricter paperwork |
| SBA 504 | Real estate and major equipment | About 10% down, fixed rate on the SBA portion, 10 to 25 years |
| SBA microloan | Startups and very small needs, up to $50,000 | Through nonprofit intermediaries, with technical help attached |
| USDA Rural Development | Businesses in rural areas | Loan guarantees and some grants through local lenders |
| Regional revolving loan funds | Gap financing, often alongside a bank | Run by county and regional development groups; local decisions, flexible terms |
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When the bank says no
Worth a look
- Revolving loan funds and community development lenders (CDFIs)
- Seller financing when buying a business: the seller carries part of the price
- Equipment leasing or financing secured by the equipment itself
- A smaller ask, staged: prove the first phase, then borrow for the second
- Fixing the reason for the no and reapplying in six months
Understand the true cost first
- Merchant cash advances: fast, but the effective rate is often over 50% and sometimes far higher
- Invoice factoring: useful for a cash gap, expensive as a habit
- Credit cards for capital purchases
- Any lender who will not state the annual percentage rate in writing
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A loan package that gets approved
Summary
One page: who you are, what you want, what it will do, how it gets repaid
Sources and uses
Every dollar in and every dollar out, including your own equity
Projections
Three years, monthly for the first, with the assumptions written down
History
Three years of returns, year-to-date statements, a debt schedule
Collateral and guarantees
What is pledged and what it is worth
The people
Who runs it, their experience, and the personal financial statement
Most declines we see are packaging problems, not creditworthiness problems.
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Starting a business in 2026
The plan
Market, competition, pricing, and a first-year cash-flow projection. Lenders and landlords both ask for it
The structure
LLC or corporation, EIN, bank account, licenses, and insurance before the first sale
The equity
At least 10% of the project cost from you, documented, to qualify for SBA lending
The first money
Microloans, revolving loan funds, and a bank line once there is a year of history
Free help exists: the Small Business Development Center, SCORE, and county economic development offices. Use them for advice; bring us in for the package.
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Why exit planning starts now
75%
of business owners want to exit within ten years
48%
want to exit within five
20 to 30%
of businesses that go to market actually sell
76%
of owners regret the sale a year later, most because they had no plan for what came next
The gap between the first number and the third is the whole reason to start early.
Source: Exit Planning Institute, National State of Owner Readiness reports (2023, 2025)
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What makes a business sellable
Clean numbers
Three years of financials a buyer's accountant can trust, with personal expenses out of the business
A business that runs without you
Staff who can operate it, written procedures, and customers who are loyal to the company, not the owner
Recurring revenue
Contracts, repeat customers, and a customer list nobody else has
Transferable assets
Leases, licenses, supplier agreements, and the name, all assignable to a buyer
A realistic price
Small businesses sell on a multiple of owner's earnings; know the number before a buyer tells you
A personal plan
What you will do, and what you need financially, after the sale. This is the part owners skip and regret
Three to five years is the right lead time. Every one of these takes longer than owners expect.
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How Civic & Main helps
1
Financing package
Plan, projections, and the lender package, assembled and submitted with you, with the reason for any past no fixed first
2
Startup package
Plan, structure, licensing checklist, first-year cash flow, and the first-money path
3
Exit and sale readiness
Buyer-ready financials, a value estimate, the gaps to close, and a timeline to the sale you actually want
Fixed fee, quoted in writing after the consultation. Financing fees are disclosed to the lender as SBA rules require.
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Next steps
A free 30-minute consultation
Bring three things and you will leave with a read on what a lender will say, or on what a buyer would pay.
- Three years of tax returns and this year's statements
- A list of what you owe, with payments and rates
- What you want to do: buy, build, expand, or eventually sell
info@civicandmain.com
civicandmain.com
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Sources
- Congressional Research Service, Changes to SBA Business Loan Program Policies in Early 2025 (SOP 50 10 8, effective June 1, 2025)
- U.S. Small Business Administration, 7(a), 504, and Microloan program pages
- USDA Rural Development, Business and Industry Loan Guarantees
- Exit Planning Institute, National State of Owner Readiness (2023 report and 2025 generational report)
- Indiana SBDC and SCORE resources for business planning
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