Is the cost to complete 338(h)10 election worth it for SBA deals?

November 20, 2025

by a searcher from Cornell University - SC Johnson College of Business in Salt Lake City, UT, USA

I know the cost of paying attorney's fees and tax advisor fees to complete a 338(h)10 election can be significant. If the deal includes a $5 million SBA 7a loan for a business with $550K in equipment, plus a $2 million building, and $2 million in goodwill, is it worth it? If so, any fairly priced providers out there?

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Reply by a professional
from University of Michigan in Dallas, TX, USA

Hey Nicholas - the cost doesn't have to be too crazy with reasonable and competent counsel and tax advisors (word of warning, lost of lawyers and accountants have no idea how to handle transaction tax matters like 338(h)(10) and 336(e) elections, and that is often what will drive the cost up...they're figuring it out as they go and you're paying for it!). Just note that 338(h)(10) applies in a pretty narrow set of circumstances. Usually a 336(e) ends up being slightly more common in SMB-land, but most commonly we'll end up working with clients on what's called an F Reorganization, which the seller implements prior to closing and has generally the same effect as an election, but with some significant benefits to the Buyer. All that said, usually the incremental cost of any of those strategies is pretty minimal comparatively speaking on a transaction like you're talking about, so I wouldn't let the need for an election or F Reorg scare you away! DM anytime to hop on a call and chat further.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Sounds like a great opportunity. If you need any lending partners that can work with the F-reorg, we would be happy to assist. You can reach me here or directly at redacted

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