How much does a business broker charge?

Business broker commissions range from 5–12% of the final sale price depending on deal size. Smaller businesses (under $1M) typically pay 10–12%, while mid-market businesses ($1M–$5M) pay 6–10%. Some brokers also charge an upfront retainer of $2,500–$15,000 for CIM preparation, which is usually credited back at closing.

How long does it take to sell a business?

Most small to mid-market business sales take 6–12 months from broker engagement to close. The stages include CIM preparation (4–8 weeks), buyer outreach and qualification (4–12 weeks), due diligence (30–90 days), and closing (2–4 weeks). SBA-financed deals add 30–60 days to the timeline.

What is seller's discretionary earnings (SDE)?

Seller's Discretionary Earnings (SDE) is the standard valuation metric for small businesses. It equals net profit plus owner salary, owner benefits, non-recurring expenses, and depreciation/amortization. SDE represents the total economic benefit to a single owner-operator. Most small businesses sell at 2–4× SDE.

Do I need a business broker to sell my business?

While you can technically sell without a broker, data consistently shows brokered transactions close at 15–25% higher prices and at higher completion rates than unrepresented sales. The exception is if you already have an identified buyer at an agreed price. In any other scenario, professional representation pays for itself many times over.

What is an IBBA-certified business broker?

The International Business Brokers Association (IBBA) is the professional body for business brokers. IBBA-certified brokers hold designations like CBI (Certified Business Intermediary) or M&AMI (Merger & Acquisition Master Intermediary), which require transaction history, continuing education, and adherence to a code of ethics. These certifications signal professional commitment and deal experience.

What is the difference between a business broker and an M&A advisor?

Business brokers typically handle Main Street and lower-middle-market transactions — businesses selling for $100K to $10M. M&A advisors operate in the middle market ($10M to $500M+) with larger teams, investment banking capabilities, and institutional buyer relationships. For businesses under $5M, a CBI-certified business broker is usually the right choice.

SBA Loans for Business Acquisition: What Sellers Need to Know

The majority of small business sales under $5M are financed — at least in part — by SBA 7(a) loans. Understanding how SBA financing works helps you set realistic timelines, price your business correctly, and avoid deals that fall apart at the bank.

How SBA 7(a) Loans Work in Business Sales

SBA 7(a) loans are the most common financing vehicle for business acquisitions under $5M. The SBA guarantees a portion of the loan (75–90%), which allows SBA-preferred lenders to offer more favorable terms than conventional commercial loans — specifically, lower down payment requirements and longer amortization periods.

SBA 7(a) Key Terms for Business Acquisition

Maximum loan amount$5 million

Buyer down payment10–15% of purchase price (typically)

Loan term (business acquisition)10 years

Collateral requirementAll available business + personal assets

Personal guaranteeRequired from all owners with 20%+ equity

Interest rate (2025)Prime + 2.25–2.75% (variable)

Typical close timeline45–90 days from application

What Your Business Needs to Be SBA-Financeable

Not every business qualifies for SBA financing. Banks assess the business itself — not just the buyer — using their own underwriting standards. Here is what lenders look for:

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Positive cash flow after debt service

The business must generate enough earnings to service the SBA loan debt — typically a 1.25× debt service coverage ratio. At current rates, a $1M loan at 10 years requires approximately $130K/year in debt service. The business needs to generate at least $162K in earnings above owner compensation.

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3 years of tax returns

Banks verify reported earnings from tax returns — not just your adjusted P&L. If your tax strategy has minimized reported income, the business may appear weaker to lenders than it actually is. This is one reason to shift from aggressive tax minimization to normalized financials 2–3 years before sale.

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Clean business credit

No tax liens, judgments, or derogatory credit history on the business entity. These are discovered in lender underwriting and can kill SBA approval even for a creditworthy buyer.

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Transferable licenses and contracts

The bank needs confidence that the business continues operating post-close. Licenses tied to the owner personally (rather than the entity) create lender uncertainty.

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Tangible collateral

While SBA loans don't require full collateral coverage, lenders will take a lien on all available business and personal assets. Businesses with significant equipment, real estate, or receivables are easier to finance.

Seller Notes: When SBA Requires Seller Financing

In some SBA transactions, the lender may require the seller to carry a small note — typically 5–10% of the purchase price — to demonstrate the seller's confidence in the business. This seller note is subordinated to the SBA loan, meaning it cannot be repaid until the SBA loan is in good standing.

While this is sometimes presented as a negative for sellers, it has a strategic benefit: a seller note demonstrates confidence in the business and often helps deals close that otherwise wouldn't. The note typically carries 5–8% interest and is fully paid within 2–3 years.

How SBA Financing Affects Deal Timeline

SBA financing adds 30–60 days to a business sale timeline compared to all-cash or conventional financing. The SBA approval process runs concurrently with due diligence but requires its own underwriting, appraisal, and documentation. From LOI to SBA-financed close: typically 75–120 days.

Buyer pre-qualification

1–2 weeks

Buyer submits to SBA lender before LOI (ideal)

Formal loan application

Week 1–2 after LOI

Full package submitted to lender

Bank underwriting

3–5 weeks

Business and buyer credit analyzed

SBA approval

2–3 weeks additional

Runs after bank approval

Closing preparation

1–2 weeks

Docs drafted, title, insurance

Evaluating Buyers: Pre-Qualified vs. Not

One of the most important things your broker should do is pre-screen buyers for financing capability before you spend time on serious discussions. A buyer who says “I'll use an SBA loan” without having spoken to an SBA lender is not a qualified buyer — they're a prospect.

Require a pre-qualification letter from an SBA lender before entering exclusive due diligence with any buyer. This single step eliminates most of the deals that fall apart at the financing stage.