The Succession Surge: A Prime Opportunity for SBA Lenders

A growing number of small business owners are stepping away from their businesses. Whether driven by retirement, burnout, or changing priorities, the result is clear: we’re in the middle of a small business handoff era. According to a June US Bank Small Business Perspective Survey, 37% of small business owners plan to sell their business in the next year.

But this wave of exits isn’t a crisis. It’s an opportunity, especially for SBA lenders.

The SBA 7(a) loan program isn’t just a financing tool for buyers. It can also be a bridge for sellers—helping them exit gracefully, on strong financial terms. And right now, it’s the perfect moment for lenders to step in and guide both parties through one of the most pivotal financial transactions of their lives. Business acquisition loans represent 24% of SBA loan dollars and 12% of total SBA loans, according to Coleman Report.

A Moment of Massive Transition

Over two-thirds of small business owners plan to retire in the next two years, according to succession statistics from TeamShares. Many of them, especially those over 55, are accelerating their timelines. Yet, only 19% of business owners plan to offer seller financing when they exit, according to a BizBuySell Insight Report.

At the same time, a younger generation of entrepreneurs is eager to step in. Gen X, Millennials, and even Gen Z are seeing business ownership not just as a lifestyle, but as a strategic wealth-building opportunity.

This convergence of motivated sellers and ambitious buyers sets the stage for SBA lenders to provide structure, confidence, and capital. SBA 7(a) loans have long been a tool used for business transitions like this as they can finance goodwill that may not have corresponding collateral coverage, mitigated by the SBA guarantee.

Why 7(a) Loans Are the Go-To Solution

The SBA 7(a) loan program is ideally suited for business transitions. Some of the benefits include:

  • Low down payment requirements (typically 10%)

  • Long repayment terms (up to 10 years)

  • Financing for goodwill, working capital, equipment, and more

  • Support for partner buyouts or family successions and asset purchase for expansion opportunities

  • No balloon payments or prepayment penalties on loans under 15 years

  • Jobs retention, as existing employees are often retained

For buyers, this means acquiring a business is more accessible and less cash-intensive. For sellers, it means the buyer is more likely to be able to close the deal at a fair price, and on reasonable terms.

A Two-Sided Lending Opportunity

Here’s the win-win: SBA lenders don’t just fund the buyer. They enable the entire transaction. That opens the door to:

  • Deeper relationships with both sides of the deal

  • Repeat business with the buyer post-acquisition (think: equipment financing, lines of credit, expansion capital, deposit relationships)

  • Seller referral opportunities as word spreads in the small business community

It also gives lenders a chance to build trust and long-term value, especially in communities where local ownership changes could impact jobs and economic stability.

The Support Business Owners Actually Need

While the stats show a surge in intent to sell, they also show a lack of readiness:

  • Only about half of owners have a formal succession plan

  • Many are unsure how to value their business or structure a deal

  • A majority say they lack access to the right resources or guidance

That’s where lenders can become more than lenders. By partnering with brokers, CPAs, and financial planners, SBA lenders can serve as navigators, not just funders. The lender who can explain how a 7(a) loan supports the seller’s exit and secures the buyer’s entry becomes a strategic advisor, one who gets repeat referrals.

Final Thought: Be the Bridge

This surge in small business transitions isn’t slowing down anytime soon. Whether it’s a family business looking to pass the torch or an owner ready to retire after decades of building, the SBA 7(a) loan is the bridge between past success and future opportunity.

For lenders, the message is clear: don’t just finance the next chapter—help write it.

Interested in learning how to ramp up your 7(a) lending? Contact your local Client Relations Officer at client-relations@bside.org.

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