Trade Businesses & Licensing? - Searchfunder

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by a searcher from University of North Texas
in Dallas, TX, USA

7mos ago

Trade Businesses & Licensing?

I'm curious if any owner-operators who did not possess the actual license needed (ex. Plumbing/HVAC) has bought a business since the new SBA rules went into effect this past Summer 2025? If so, how did you navigate the licensing obstacle? I heard through a Business Broker a few days ago that SBA lenders he spoke with were now requiring at least two employees to have the license in order to qualify the business if a new owner does not have the license themselves. He specified at least two were needed in order to provide an adequate safety net in case one employee decided to leave.

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reply by a lender 7mos ago
from Cornell University in Los Angeles, CA, USA

Hi Anon - nice to meet you. This is a very timely question because SBA licensing rules tightened this year. If you do not personally hold the required trade license (plumbing, HVAC, electrical, etc.), lenders now need to see a clear licensing continuity plan. The seller can stay on as a consultant for up to 12 months, but must fully exit after that. The strongest path is having an existing employee who already holds the license and is willing to sign a multi-year employment agreement with retention incentives. Depending on the lender, they may also require that employee to hold 0.5%–2% equity, and in some cases, they will require that employee to personally guarantee (PG) the loan because they are viewed as critical to operations. Hiring a brand new licensed employee right before closing rarely works. Lenders want evidence that the licensed individual has been active in operations and will stay for several years post-close. Some states or lenders also require two licensed employees to ensure redundancy. We have a lot of experience financing licensed trades via the SBA. If you ever need help talking through a deal, I am happy to help. We work with all the major SBA lenders. The bank pays us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: redacted. Look forward to chatting!

reply by a searcher 7mos ago
from Georgia State University in Washington DC Metro

We have not bought a company using SBA funds since the new rules kicked in. Primary seller financing used and we keep the owner onboard for future upside. We've found that quite a few sellers don't want to leave immediately although some do want to. At this juncture in our lifecycle, however, we choose to steer clear of sellers who want to walk out immediately UNLESS it's in close proximity to one of our other locations in the region. It can then be absorbed by current manpower and take advantage of economies of scale in the geography. If/when we get another SBA loan in the future, we'll likely use our current licensees in those states that we already have covered...so, essentially, we already have the license.

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