Working Capital in SBA Deals

January 30, 2026

by a searcher from University of California, Los Angeles - UCLA Anderson School of Management in Oceanside, CA, USA

I'm working on an SBA 7(a) financed stock purchase and the seller's broker claims "SBA will not allow working capital pegs." My LOI included a standard WC adjustment mechanism (target based on trailing 12 months, with purchase price true-up at closing). I've searched SOP###-###-#### and can't find any prohibition—it appears silent on this issue, suggesting it's a private contractual matter. Has anyone successfully closed SBA deals with working capital adjustment clauses? Is this a legitimate SBA restriction or is the broker confused/strategic? Without this protection, I'm exposed to the seller draining cash pre-closing with no recourse. Reaching out to my lender but wanted a community gut-check first.

Reply by a professional
from University of Denver in Denver, CO, USA

We have closed many SBA 7(a) financed deals with working capital pegs. The typical issue I see with SBA loans is that the purchase price cannot increase from what the bank underwrites, which is a problem with a typical working capital adjustment provision that says the purchase price increases or decreases dollar-for-dollar to the extent that closing working capital is above or below the peg. To fix this, we typically structure the working capital to say that if the closing working capital is below the peg, the seller note decreases dollar-for-dollar and if the closing working capital is above the peg, then a/r in the amount of the excess will be paid to seller when it is received. However, your statement that "in my scenario the seller wants to structure it with base price then the seller takes out all A/R before closing leaving the company with almost no working capital" seems to be a purchase price issue. In other words, if the base price is staying the same and you are negotiating whether or not the NWC should be included, this is a purchase price negotiation. Happy to talk if that is easier. Just send me an email and we can set up a time redacted

Reply by a searcher
from The University of Chicago in Chicago, IL, USA

Many SBA will lend you what you need for WC as line of credit as part of the loan deal so you shouldn’t need the float from the seller which could be construed as an earn out which is not allowed.

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