What Happens After SBA Loan Authorization? Step-by-Step Post-Approval Guide

Receiving your SBA 7(a) loan authorization is a major milestone—one that signals the lender has reviewed your deal, found it financeable, and obtained SBA authorization for the guaranty. But authorization is not the finish line. Between authorization and closing, the lender must complete final underwriting, collect documentation, verify eligibility, and satisfy SBA closing requirements.

At this stage, many business buyers feel unsure about what comes next. This guide explains the typical post-authorization process, what lenders may request, and how to keep your acquisition moving smoothly toward closing. The steps below reflect common SBA lender practices and the SBA SOP 50 10 8 framework, though specific requirements may vary by lender.

As always, Pioneer Capital Advisory helps clients navigate these steps—coordinating lender communication and ensuring each item is completed efficiently from LOI through closing.

Step 1: Lender Issues an Updated Loan Commitment and Pre-Closing Checklist

After the SBA authorizes the guaranty, the lender typically updates the formal commitment or term sheet with any conditions required for closing. This document outlines items the lender must verify before disbursing funds, which may include:

• Final purchase agreement
• Updated financials from the seller
• Updated year-to-date financials on the business
• Buyer documentation (corporate documents, identification, resumes, etc.)
• Proof of equity injection
• Insurance requirements (hazard, liability, workers comp, etc.)
• Landlord documentation if the business is in leased space

While PCA does not draft legal documents or file entity paperwork, we guide clients on where to obtain missing items and ensure all requirements are understood and managed appropriately.

Step 2: Final Underwriting Review

Even after authorization, lenders typically complete a final underwriting pass to confirm that nothing material has changed. This includes validating:

• No adverse changes in business performance
• No material changes to buyer financials
• All SBA eligibility requirements remain satisfied
• No new liabilities or structural changes

The SBA SOP requires the lender to ensure eligibility from application through disbursement, so this step is standard. Minor changes may only require explanation; significant deviations may require lender reconsideration.

PCA helps buyers anticipate these requests and package responses so lenders can quickly complete their review.

Step 3: SBA Eligibility Verification and Required Checklists

Lenders also verify SBA eligibility based on SOP 50 10 8 requirements, which may include:

• Confirming ownership structure and compliance with SBA citizenship/residency rules
• Validating that the business remains eligible (operating, for-profit, U.S.-based)
• Ensuring buyer and guarantor information is consistent
• Revalidating that credit is not available elsewhere, as required under 13 CFR § 120.101
• Checking the CAIVRS database to confirm no delinquent federal debt, if applicable

These reviews are standard across all SBA lenders. Where needed, PCA helps buyers understand the documentation behind these requirements.

Step 4: Third-Party Reports and Final Documentation

Depending on the deal, lenders may require certain third-party reports before closing. Common examples include:

• Business valuation or loan valuation (typical on change-of-ownership transactions)
• Environmental reports (if real estate is included, per SOP environmental requirements)
• Landlord subordination or consent if the business occupies leased space
• Franchise documentation if applicable

Lenders may also require updated business tax returns, interim financial statements, or seller certifications. Because requirements vary by lender and deal structure, PCA ensures clients are prepared for the specific requests their lender typically makes.

Step 5: Verifying the Equity Injection

Before closing, the lender must verify the buyer’s equity injection. This is an SBA requirement and commonly includes:

• Bank statements showing sourced funds
• Wire confirmations
• Gift letters (if applicable)
• Documentation of seller financing terms

Lenders must confirm that equity is injected prior to or at closing and that injection sources are acceptable under SBA rules. PCA helps buyers compile verification documentation and ensure it aligns with lender expectations.

Step 6: Finalizing the Purchase Agreement

Once all financing terms are agreed upon, the buyer and seller typically finalize the purchase agreement. Lenders may need to review:

• Final purchase price and terms
• Working capital target or adjustments
• Inventory counts (if material)
• Any seller transition agreements
• Any addendums affecting financing

PCA helps ensure the final purchase agreement remains consistent with financing structure and lender approval parameters.

Step 7: Preparing Closing Documents

As closing approaches, the lender prepares SBA-required closing documents, which may include:

• SBA Note
• SBA Loan Authorization
• Security agreements
• Personal guaranties
• Corporate resolutions
• Landlord waivers (if required)
• Evidence of insurance

Each lender has its own closing package format, but the SBA requires specific documents to secure the guaranty. PCA coordinates the process, ensuring clients understand what they’re signing and what must be in place.

Step 8: Final Closing Conditions and Funding

When all conditions are met, the lender performs a final review and schedules closing. Typical final steps include:

• Buyer signs loan documents
• Equity injection is funded to escrow or the seller
• Lender wires loan proceeds
• Buyer assumes ownership of the business

For many business buyers, this day represents the culmination of a long acquisition process. PCA remains involved through the final milestone to ensure a smooth, timely close.

Conclusion

SBA loan authorization is a major achievement, but closing requires careful coordination between the buyer, seller, lender, and advisors. Each step—from documentation to underwriting review—helps ensure the loan remains compliant with SBA program requirements and is ready for disbursement.

With a partner like Pioneer Capital Advisory guiding the process, buyers can move through post-authorization steps with clarity and confidence, ensuring their acquisition closes efficiently and in alignment with lender expectations.

If you’re preparing to close on a business acquisition—or you’ve received a term sheet and want guidance through the SBA process—PCA is here to support you from start to finish.