SBA vs. conventional loans for RIA acquisitions

Deal activity for registered investment adviser firms remains strong in 2026, and buyers must choose how to finance acquisitions. The two standard options are SBA 7(a) loans and conventional commercial loans. Each option changes the down payment, loan term, approval time and how lenders structure deals.

SBA 7(a) loans are partially guaranteed by the U.S. Small Business Administration. The federal guarantee reduces lender risk and typically allows lower down payments, often 10% to 15%, and repayment terms up to about 10 years for practice purchases. Lenders require several years of firm financials, verification of recurring revenue and more documentation than conventional lenders. SBA underwriting and approval processes generally take longer.

One representative example involved an RIA with $75 million in assets under management acquiring a $30 million book for $2.1 million. The buyer used an SBA 7(a) loan to finance 90% of the purchase. The lower upfront cash outlay let the buyer keep reserves to fund a managed client transition and temporarily retain the departing advisor, but the additional paperwork extended closing to roughly 60 days.

Conventional commercial loans come from a lender’s own capital and offer more flexibility on terms and deal structure. Typical down payments range from 20% to 30%, with repayment periods commonly five to seven years. Banks underwrite deals on a case-by-case basis, which can speed approval and allow packaging of complex transactions such as multipractice acquisitions, earnouts and partial seller carrybacks into a single loan.

In one transaction, an independent RIA combined two books — $20 million and $15 million — into a single $2.5 million acquisition that included a seller carryback on one part of the deal. A conventional lender approved the package in about three weeks and accommodated the combined structure. The buyer had a higher initial cash requirement and larger monthly payments under the shorter term.

Lenders typically finance 80% to 90% of a purchase and take the advisory firm’s recurring revenue into account when securing the loan. The appropriate choice depends on a buyer’s cash on hand, desired repayment horizon, the complexity of the transaction and how quickly the buyer needs to close.

Christopher Cornella, vice president of business development at US Professional Funding, noted that “speed and certainty of close are genuine competitive advantages.” Advisers and deal advisers recommend securing loan preapproval before entering formal negotiations so buyers can present offers that align with sellers’ timing and expectations.

Buyers, sellers and lenders continue to use both SBA and conventional loans for RIA deals. Each tool has defined trade-offs that affect cash requirements, closing timelines and the types of deal structures lenders will support.