Program Summary

It's a structured, three-phase small business sale using SBA 7(a) financing. First, a vetted veteran successor joins your company as a W-2 employee. During their first 24 months of employment, the successor can buy a minority stake — less than 50%, without becoming the largest owner — as an SBA Owner Buyout. Second, once the successor has been employed by the business for at least 24 months, they can buy majority control. You keep a minority stake, stay involved, and personally guarantee the loan, because SBA requires at least one original owner to remain and guarantee it. Third, at final exit (typically after your two-year guaranty period), the successor acquires your remaining interest. This sequence follows SBA rules effective October 1, 2026, which limit anyone employed by the business for less than 24 months to less than 50% of the equity under Owner Buyout treatment.

Traditional sales are drawn-out, expensive, and adversarial, with multiple intermediaries and an all-or-nothing closing. Ownership Handoff™ is seller-first and collaborative. SBA rules allow a partial sale in which you keep a stake and stay in the business, so you can sell in stages instead of handing over 100% on a single day and walking out the door. Your successor can buy a minority stake early on, and once they have worked in the business for at least 24 months, their majority purchase qualifies for SBA's more favorable Owner Buyout treatment.

Buyers come from a vetted network of military veterans with strong leadership backgrounds. You meet candidates, select the one you trust, and that person joins your company as an employee. They can buy a minority stake (less than 50%) along the way, but must be employed by the business for at least 24 months before purchasing majority control.

Two reasons. The practical one: your successor learns the operation, meets your customers and employees, and earns their confidence while you are still there to make introductions. The regulatory one: under SBA rules effective October 1, 2026, anyone who has been employed by the business for less than 24 months can acquire less than 50% of the equity, without becoming the largest owner, and still be treated as an Owner Buyout. Once the successor has been employed for at least 24 months before the loan application, they can purchase majority control as an Owner Buyout, which allows the lender to reduce or waive the 10% equity injection and requires no Quality of Earnings report. A majority purchase before the 24 months are up is underwritten under the stricter Initial Acquisition standards: a 10% equity injection that cannot be reduced, and a Quality of Earnings report when the business purchase price is $3 million or more.

If your successor buys a minority stake (less than 50%) during their first 24 months, you are paid for that stake at that closing. At the majority closing, after the successor has been employed for at least 24 months, you are paid for the additional stake you sell — bringing the successor to typically 80% or more of the company — less any portion you agree to carry as a seller note. The balance is paid when your successor acquires your remaining interest at final exit. Most sellers retain less than 20% after the majority closing, because that is what gives the seller's loan guaranty a defined end date — see the guaranty question below. The exact split is driven by what the lender-ordered business valuation and the business's historical cash flow support under SBA rules.

A selling owner who remains an owner of less than 20% after the sale must personally guarantee the full loan amount — but that guaranty has a defined term: at least two years after the loan is fully disbursed. The SBA loan must be current for 12 consecutive months in order for the selling owner to be released from the guaranty after the two-year period. SBA does not require these guarantors to pledge personal assets, such as a personal residence, against a collateral shortfall. A seller who keeps 20% or more is treated as an ordinary owner-guarantor with no two-year end point, which is one reason the structure is usually built around a retained stake below 20%.

You retain a majority ownership stake and can stay on as an owner, officer, director, key employee, or employee of the business. An employment agreement for the Seller, an amended Operating Agreement (if LLC), or amended Certificate of Incorporation/By-laws (if a C-Corp) are also part of the process and balance risk and control of the business. This is specific to a partial change of ownership. In a whole-business sale to an outside buyer (an Initial Acquisition), SBA requires the seller to step out entirely and permits only a consulting arrangement of up to 24 months. Staying in the business is one of the structural advantages of this path, not a courtesy.

Not necessarily. Seller financing is an option, not a requirement. If a seller note is used and placed on full standby, SBA may count it toward the buyer's required equity injection — but standby debt, seller debt, and passive investor equity together can supply no more than half of that injection. In an Owner Buyout, the lender may also reduce or waive the equity injection requirement if it determines the borrower has sufficient liquidity and working capital to sustain operations after the transaction and the balance sheet did not show a negative net worth at the last fiscal year-end.

SBA's minimum equity injection for this type of transaction is 10% of the purchase price. When the deal qualifies as an Owner Buyout — a minority purchase of less than 50% during the successor's first 24 months, or a majority purchase after the successor has been employed for at least 24 months — the lender may reduce or eliminate that requirement if it determines that the borrower has sufficient liquidity and working capital to sustain operations after the transaction, and that the balance sheet did not show a negative net worth at the last fiscal year-end. If the lender eliminates the requirement, dedicated permanent working capital cannot be included in that or any other 7(a) term loan for 90 days. If the deal is underwritten as an Initial Acquisition, the 10% cannot be reduced. Fees paid for education, advisory services, or to an agent do not count toward the equity injection. This is a lender determination made deal by deal — not something the program can promise in advance.

Not when each purchase stays within the Owner Buyout rules: a minority stake of less than 50% (without becoming the largest owner) during the successor's first 24 months, and majority control only after the successor has been employed by the business for at least 24 months before the loan application. SBA requires a lender-ordered Quality of Earnings report on initial acquisitions and business expansions where the business purchase price is $3 million or more. Owner buyouts are exempt at any purchase price, because the existing owner stays in place and the operating structure does not change. If the successor buys majority control before reaching 24 months of employment, the transaction is underwritten as an Initial Acquisition and a QoE is required at a business purchase price of $3 million or more. A lender-ordered business valuation is still required on every transaction.

Insurance coverage, estate and tax planning, holdback provisions for pre-closing liabilities, working capital adjustments, an employment agreement for the seller, and amendments to corporate governance documents to protect the buyer and the seller as agreed between them are included.

Financial planning, estate and tax planning, protective insurance, and a collaborative legal process to streamline closing.

Full SBA loan arrangement, comprehensive financial planning, continuity insurance, and the seller's continued involvement for relationship transfer. Successors should understand that in a partial change of ownership, SBA requires every new owner to sign as a co-borrower on the loan, regardless of the percentage acquired, which makes them fully liable on the note. New owners who hold their interest indirectly must also personally guarantee it. As co-borrowers, new owners are subject to SBA's collateral rules if the loan is not fully secured. The successor buys directly into the operating company; SBA does not permit a structure in which the seller and successor form a new holding company to own the business.

Seller goal setting and preliminary value assessment.

Successor sourcing, vetting, and selection.

Due diligence.

Lender-ordered business valuation, purchase agreement, and SBA loan process.

1st up-front minority purchase — successor buys less than 50% of the business.

Successor Residency — your chosen successor joins the company as a W-2 employee for 24 months.

Phased role - you remain on the payroll as negotiated under an employment agreement negotiated with the successor.

2nd purchase - up to the remaining 100% is purchased by the successor based on the future valuation.

Final exit — successor acquires the remaining interest.

The approach protects your legacy, reduces the buyer's capital barrier, secures genuine cooperation through the transition, and lowers transaction time and cost through integrated services and collaborative legal representation. It also keeps you in the business during the handoff, which SBA permits in a partial change of ownership and does not permit in a conventional sale.

SBA rules set practical limits. The business portion of a 7(a) acquisition loan must amortize in 10 years or less. Total debt supporting the purchase, including any seller note that is not on full standby, cannot exceed the lender-ordered business valuation. The business must show debt service coverage of at least 1.25 to 1 on historical or adjusted earnings — projections cannot be used to meet it. And the maximum Standard 7(a) loan is $5 million. The result is that deal size is governed by what the company's actual cash flow supports, not by the asking price. Most transactions in this program fall under $10 million if commercial real estate is part of the transaction.

SBA rules effective October 1, 2026 sort every acquisition into one of four categories — Initial Acquisition, Business Expansion, Owner Buyout, and ESOP & Cooperative — each with its own equity, coverage, and due diligence requirements. Two distinctions matter most for this program:

Buyers Employed Less Than 24 Months: Anyone who has not been employed by the business for at least 24 months — including your successor during their first 24 months, and any outside buyer — can acquire less than 50% of total equity, without becoming the largest shareholder, and still be treated as an Owner Buyout. A larger purchase is underwritten under Initial Acquisition standards: a 10% equity injection that cannot be reduced, and a Quality of Earnings report at a business purchase price of $3 million or more.

Owner Buyout (Employees of 24+ Months): Once an individual has been employed by the business for at least 24 months, they can purchase majority control (50% or more) while the selling owner retains a minority stake and stays actively involved. The lender may reduce or waive the 10% equity injection, and no Quality of Earnings report is required.

This is why the program brings your successor in as an employee first: they can take a minority stake early, and the majority transfer happens once they reach 24 months, under the more flexible Owner Buyout rules — without you having to walk away from the business completely.

Our qualified buyers are military veterans. We verify military service, leadership record, and honorable discharge status; conduct a background check; and pre-qualify their bankability across our network of SBA lending partners. Candidates have also completed the VETtoCEO (non-profit) program and are prepared to join your company as an employee and work in the business for at least 24 months before purchasing majority control. SBA also requires every owner and SBA-required guarantor to be a U.S. citizen or U.S. national whose principal residence is in the United States; lawful permanent residents are not currently eligible. This requirement also applies to a seller who retains any ownership stake after the sale.