Expansion Acquisition Simulator
You already own a business. You want to buy another one. Under the new SOP, the only route to 100% SBA 7(a) financing on an acquisition runs through the Business Expansion category, and it has four gates. Fill in the three parts below — the rail on the right updates as you type, and the term-sheet view at the bottom shows what a lender will need to document to get there. Every rule the tool applies is footnoted to the SOP page in the Sources section at the end.
Is it a Business Expansion?
Two full fiscal years under current ownership, a 100% purchase, the same four-digit NAICS Industry Group, and no fewer full personal guarantors than before. Miss one and it's an Initial Acquisition with 10% equity, fixed.
Can the equity be eliminated?
A lender determination, available only with a non-negative net worth at the last fiscal year-end, documented liquidity, and no permanent working capital in the term loan.
Does combined cash flow cover it?
Combined EBITDA over combined post-closing debt service must reach 1.15x, from historical results or lender-justified adjustments. Projections don't count.
Do price and size hold up?
The valuation must support the price, a QoE is required from $3M, and a Standard 7(a) loan tops out at $5M.
Term-sheet view
Complete the form or load an example to populate the sources and uses, the combined debt-service test, the two equity paths, and the findings a lender will need in the credit memorandum.
Sources & uses
| Uses | Amount |
|---|---|
| Sources | Amount |
Combined debt-service coverage
Two ways to structure it
On a Business Expansion the SOP gives you a choice: keep working capital out of the term loan and ask the lender to eliminate the equity, or fund working capital in the loan and inject 10%. The table shows what each path costs in cash and what it does to the coverage ratio.
Before and after October 1, 2026
The same deal under the SOP that governs applications processed before October 1, 2026 (SOP 50 10 8) and the one that governs afterward (SOP 50 10 8.1). Which SOP applies depends on when the lender assigns the SBA loan number — confirm it in writing.
What to do with this
Pioneer Capital Advisory has closed 150+ SBA 7(a) acquisition loans totaling $330M+ since 2022. Use "Email this to Pioneer" or "Copy summary" and send it to deals@pioneercap.com; we'll match it to lenders whose expansion policies fit.
How to use the Expansion Acquisition Simulator
- Describe your existing business. Enter its six-digit NAICS code, the number of full fiscal years it has operated under current ownership, whether its last fiscal year-end net worth was positive, cash and undrawn line availability, EBITDA, existing debt service, and the number of full personal guarantors today.
- Describe the business you're buying. Enter the target's NAICS code, the contract price and any owner-occupied real estate included, its EBITDA, what happens to the seller, and guarantors after closing. The tool derives the Business Purchase Price and the four-digit Industry Group match.
- Set the structure. Enter closing costs, due-diligence costs, any cash you plan to inject, any seller note and its terms, the current Prime rate, and any permanent working capital you want inside the 7(a) term loan and where post-closing working capital will come from.
- Read the verdict and the term sheet. The rail shows which of the four gates you clear. The term-sheet view shows sources and uses, the combined DSC calculation, the 0%-equity path against the 10% path, sensitivity, the before/after October 1 comparison, and a finding-by-finding list with SOP citations. Use "Copy summary" or "Copy share link" to send it to a lender or to Pioneer.
What the simulator checks — and what it cannot
It applies the text of Appendix 15. Category determination, the three equity-elimination conditions, the combined 1.15x/1.25x DSC using a straight amortization at the rate you set, the blended weighted-average term when real estate is included, the interest-only seller-note rule, the $3M QoE threshold on the Business Purchase Price, the valuation cap, and the $5M Standard 7(a) maximum.
It cannot make the lender's determination for you. Reducing or eliminating equity on a Business Expansion is a lender judgment that must be documented in the credit memorandum. The liquidity screen in Gate 2 (cash plus line availability of at least 5% of total project cost) is a Pioneer heuristic to flag thin balance sheets, not an SBA rule. Add-backs, owner-compensation adjustments and combined-entity synergies are only usable if the lender can justify them; the tool does not invent them. Actual debt service depends on the lender's rate, fees, and closing date.
Simulator FAQ
Is this the same as SBA approval?
No. It is an educational screening tool built on SOP 50 10 8.1, Appendix 15. Category, equity and coverage are underwritten by an SBA lender, and equity elimination on a Business Expansion is always a lender determination.
Why does adding working capital to the loan change my verdict?
Because SOP 50 10 8.1 bars permanent working capital from this or any other 7(a) term loan for 90 days when the equity injection is eliminated. Working capital in the term loan means the 10% applies — and total project cost, and therefore the 10%, now includes the working capital.
How is the debt service coverage ratio calculated?
Combined EBITDA (your business plus the target, with a rent add-back if you are buying the real estate) divided by combined post-closing debt service: your existing debt service, the new 7(a) payment at the rate and term shown, any non-standby seller-note payment (interest-only notes are amortized over 10 years), and interest on any line drawn at closing. The required ratio is 1.15x for a Business Expansion and 1.25x for an Initial Acquisition.
What is the Business Purchase Price?
The contract price less the appraised value of any owner-occupied real estate included in the deal. It sets the due-diligence thresholds — including the $3 million Quality of Earnings trigger — before equity or seller financing is counted.
Can I save or share my inputs?
Yes. Every input is encoded in the page address as you type; "Copy share link" copies it. Anyone opening the link sees the same inputs and verdict. "Copy summary" copies a plain-text term sheet, and "Print" produces a PDF-ready version.
How does the "Before and after October 1, 2026" table work?
It re-runs your deal under SOP 50 10 8, which governs applications processed before October 1, 2026. Under the old SOP an expansion needed the same six-digit NAICS code, identical ownership, the same geographic area and Co-Borrower status, in exchange for no minimum equity; otherwise 10% applied. The table shows the cash required under each SOP and flags which is better for your deal.
Where does the NAICS lookup come from?
The 2022 NAICS code list published by the U.S. Census Bureau, embedded in the page. Type a code or an industry name; the tool shows the six-digit title and the four-digit Industry Group that SBA compares. Always use the code reported on the business's most recent tax return.
What does "Draft the narrative" produce?
A plain-text first draft of the credit-memo sections Appendix 15 requires for a change of ownership — category determination, equity injection, working-capital adequacy, debt service coverage, financial due diligence, and structure — written from your inputs with SOP page citations. Lenders edit it; it is not a substitute for their underwriting.
Which interest rate should I use, and where do I find today's Prime rate?
Enter the current Prime rate in Part C and the lender spread you expect; the tool adds them to get the 7(a) rate. SBA 7(a) variable-rate loans are priced off the Prime rate published in the Wall Street Journal; the same rate appears on the Federal Reserve's H.15 release (federalreserve.gov/releases/h15) as "Bank prime loan." The default of 6.75% is the rate when this tool was built — always replace it with today's figure. Acquisition loans typically carry a spread of 2.25% to 2.75%; maximums are set in Appendix 18 of the SOP.
Sources
Every footnote above resolves to the SOP language below, numbered in order of first appearance. Page numbers follow the SOP's own table-of-contents pagination and may land one page earlier or later depending on the viewer.