Scaling Beyond the $5 Million SBA Cap?

Always great insights from our CEO, Matthias Smith, on how buyers can scale beyond the $5M SBA cap using a pari passu structure. I'm sharing his thoughts below: A common misconception among business buyers is that the SBA 7(a) loan program sets a hard ceiling at $5 million. In reality, larger acquisitions are achievable when SBA financing is paired with conventional debt in what’s known as a pari passu structure. This approach allows the SBA loan and the conventional facility to sit side by side on equal footing—dramatically expanding the size of transactions that buyers can pursue. Here’s what that looks like in practice: - A $10 million acquisition might seem out of reach if relying on SBA alone. - But when structured with $5 million of SBA financing, $3 million of conventional debt, and 10% equity from buyer and investor capital, the deal becomes executable. - For buyers with strong personal financials and a clear operating plan, this opens the door to acquiring companies producing $2 million (or more) in EBITDA. The critical factor: lenders expect buyers to have meaningful personal liquidity—cash, marketable securities, or retirement funds in the case of a ROBS structure. Even when equity investors are involved, banks want to see the buyer has true “skin in the game.” At Pioneer Capital Advisory LLC, we’ve helped clients close more than five of these larger, pari passu–structured transactions in just the last three months. Our banking partners continue to show strong appetite for this type of financing. A few recent examples: •Technology company • $4.75MM SBA loan • $250K SBA Express LOC • $1.25MM conventional loan •Book publishing business • $5MM SBA 7(a) term loan • $2.6MM pari passu conventional loan • $400K conventional LOC •Auto repair business • $4.9MM SBA 7(a) term loan • $100K SBA Express LOC • $100K conventional LOC •Oil & gas company • $5MM SBA 7(a) loan • $760K pari passu conventional loan • $2MM ABL line of credit The takeaway: with the right structure, deals in the $8–10 million range are not only possible—they’re happening right now.