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Best business loans for buying out a business partner in 2026
The best loan for buying out a business partner is an SBA 7(a) loan, which can finance a partner buyout over as long as 10 years. Many buyouts also use a note to the departing partner for part of the price. A bank term loan can work for a profitable company with strong credit. Agree on the valuation in writing before you look for financing.
By the WithFunded team · Published November 11, 2026 · Rates as of November 2026
The short list
- Best overall
- SBA 7(a) loan
- Best to reduce the amount borrowed
- Seller financing
- Best for strong, established companies
- Bank term loan
- Best for a small buyout that must close fast
- Online term loan
The 4 best options, ranked
1. SBA 7(a) loan Best overall
A buyout pays for ownership, not an asset a lender can repossess. The SBA guaranty is what lets a bank finance it on a long term at a capped rate.
Watch for: Heavy documentation, and the timeline rules it out for anything urgent. SBA loan guide →
2. Seller financing Best to reduce the amount borrowed
A departing partner who accepts payments over time lowers the loan you need and signals confidence in the business.
Watch for: Usually covers only part of the price, so it works alongside a loan rather than instead of one.
3. Bank term loan Best for strong, established companies
A business with solid earnings and collateral may finance a buyout conventionally at a lower rate.
Watch for: The slowest route outside SBA and the hardest to qualify for. Term loan guide →
4. Online term loan Best for a small buyout that must close fast
A minority stake at a modest price can be financed with an online term loan when speed matters more than rate.
Watch for: A longer term lowers the payment but raises the total interest you pay. Term loan guide →
Side-by-side comparison
| Option | Verdict | Cost basis | Funding speed | Qualifies on |
|---|---|---|---|---|
| SBA 7(a) loan | Best overall | Capped at 10.00%–13.50% by loan size (prime plus the SBA maximum spread) | Weeks to months | Generally stronger credit and two or more years in business |
| Seller financing | Best to reduce the amount borrowed | Negotiated with the seller as part of the purchase | Follows the deal timeline | The seller's willingness; often paired with an SBA 7(a) loan |
| Bank term loan | Best for strong, established companies | About 7% median on new small-business term loans (Kansas City Fed, Q4 2025) | Weeks | Strong credit, established financials, often collateral |
| Online term loan | Best for a small buyout that must close fast | Representative 8%–30% APR, fixed payments over 6 to 60 months | Days | Revenue, time in business, and credit |
What it costs
SBA 7(a) rates are capped at prime plus a maximum spread that shrinks as the loan grows. At the current 7.00% prime rate, these are the highest payments a lender could charge on a 10-year term:
| Loan amount | Maximum rate | Monthly payment at the maximum |
|---|---|---|
| $150,000 | 13.00% | $2,240 |
| $500,000 | 10.00% | $6,608 |
| $1,000,000 | 10.00% | $13,215 |
Payments at the SBA maximum variable rate for each size tier. Many borrowers qualify below the maximum. Source for rate caps: U.S. Small Business Administration. WithFunded calculation.
What lenders look at
- A business valuation and the buy-sell agreement.
- Cash flow after the buyout, including the departed partner's role being filled.
- The remaining owner's credit and experience running the company alone.
Mistakes to avoid
- Negotiating price without an independent valuation.
- Draining the company's cash to fund the buyout and leaving nothing for operations.
Frequently asked questions
- Can I use an SBA loan to buy out a partner?
- Yes. SBA 7(a) loans can finance a partner buyout. Lenders will review the valuation, the company's balance sheet, and its ability to carry the payment afterward.
- How is a partner's share valued?
- By the method in your partnership or operating agreement if it has one, otherwise by negotiation supported by an independent business valuation.
- Can the departing partner finance the buyout?
- Yes. A promissory note to the departing partner is common, often combined with a loan. Its terms should be set out in the buyout agreement.
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How we ranked these options
This guide ranks types of financing, not individual lenders. Each option is ordered by how well it fits the need described on this page, judged on four things in this order: whether the structure matches how the money will be used and repaid, total cost, funding speed, and how hard it is to qualify. Cost figures are WithFunded calculations from published rate inputs as of November 2026: the bank prime loan rate from the Federal Reserve, the SBA maximum-rate schedule, and Federal Reserve survey data. The method follows our 2026 SMB Financing Cost Report, whose own figures use June 2026 rates.
WithFunded is a financing marketplace, not a lender. Our 2-minute form suggests a product type from the families we cover, and a funding partner reviews the request. Not every structure named in this guide is available through WithFunded: options such as SBA microloans, USDA farm loans, bank loans, and seller financing are ones you would pursue directly with the provider. They are listed because leaving out a good fit would make the ranking less useful.
Related guides
The top-ranked option on this page is SBA 7(a) loan because it fits the most common version of this need. Your own best fit depends on your revenue, time in business, credit, and how fast you need the money.
Disclaimer. WithFunded and Big Think Capital are a financing marketplace; we are not the direct lender and do not guarantee funding, approval, rates, or terms. Everything on this page is a representative example only — not an offer or a commitment to lend, and not financial advice. Actual rates, fees, payments, and terms are set by the funding lender and depend on your business, credit, and the product. Where required by state law, the lender provides cost-of-financing disclosures before any agreement is signed.