The Goodwill Rule for SBA Changed: What You Need To Know

As of January 1, 2018, SBA has changed the Business Acquisition Equity Requirements. This requirement is commonly referred to as the “Goodwill Rule.”

Updates are as follows:
  • They eliminated the $500,000 benchmark all together.  
  • They now require that the buyer puts down a minimum of 10% of the Project Costs. (NOTE: This is 10% of the project costs not the purchase price. If working capital is included, along with closing costs and SBA Fees, they have to come up with 10% of everything.)
  • They changed the seller note counting as equity from 2 years standby to standby for the life of the SBA loan.  

You might want to continue preparing your clients for seller notes as most lenders have not figured out how they are going to treat these new rules. After speaking with several lenders recently about this and every lender seems to be scrambling to adapt to this change. Also, your buyers might want the seller to have skin in the game, even if it is not for equity reasons. 

If you have questions regarding the Goodwill Rule, please email Mark Pompeo with Wells Fargo SBA Lending at

For any additional questions, please contact Saeed Moghadam with our Capital Advisors team. We provide the investment banking function for small to mid-sized companies and help large organizations identify acquisition targets. Our team provides middle market companies with their capital needs, due diligence, buy and sell side searches, in addition to analyzing and approving an overall growth strategy. We have the experience working for the largest banks and CPA firms in the country. Our professionals provide the knowledge of a large firm and the personal attention of a small firm.