Trade Businesses & Licensing?

November 17, 2025

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

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.

3 Likes

10 Replies

187 Views

Replies

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

Great question. Of course being sure you have the license in place at closing to operate any technical business you acquire is going to be required by any sort of lender, and is certainly a condition of getting an SBA 7A loan. However, what is required by individual SBA lenders varies quite a bit. The preference is always that the owner / guarantor has the license or is on a short path to get that license. However, when that is not possible (maybe it takes years to get the license), you can still get the transaction done without the owner / guarantor having the license under the following circumstances: 1) An owner of the business is not required by state law to be the licensee. If this is the case, then you would need to bring someone into the transaction and provide them with ownership or give an existing employee ownership that has the license to be sure you meet this state requirement. 2) You can rely on the seller's license for up to a year (so long as it is allowed by state law) but most lenders are going to require you to have a backup to that seller like a key employee or someone outside the organization that can replace that license in the interim. 3) My typical recommendation to clients is to provide the lender with multiple avenues for you to maintain the license. These might be the following: a) the seller will maintain the license for one year; b) during that time I as the owner can get the license; c) or during that time a key employee can get that license and I plan to give them equity; d) or I plan to hire someone with the license and give them equity; e) or there are multiple people in the business with the license so I do not need to give anyone equity as they can maintain it. The more paths you have to easily keep the license, the less risk the lender sees. Lastly, please keep in mind if a key employee holds the license, there is a chance the Bank will want that employee to sign at least a limited guarantee on the loan. Lenders want this to ensure that key employee will not leave suddenly and leave you without a business you can operate because you do not have the necessary license. Keep in mind some Banks will not do the deal at all unless an owner / guarantor holds the license. I hope this helps. If you would like to discuss licensing further, you can reach me here or directly at redacted

Reply by a searcher
from Pennsylvania State University in Nashville, TN, USA

I acquired an electrical contracting business just before the rule changes, but as Brad mentioned it will likely be in large part determined by a combination of state regulations and your lender. I would recommend: 1) Get clarity on the specific of the state regulations during a transfer of ownership. If possible, communicate directly with the state contractors/licensing board to understand specifics. It's surprising how opaque this can be in some states without seeking additional clarity. 2) Bring your learnings to the lender if they are not already aware of these specifics. 3) If you or the owner are not able to serve as the license holder yourself, be prepared to potentially hire your new license holder prior to close. This is what we did, and this allowed us to immediately put our new Qualified Agent (license holder) in place immediately after close.

+8 more replies.

Join the discussion