Most CPA and accounting firm purchases by an individual or a small firm are financed with an SBA 7(a) loan: up to $5 million, repaid over up to 10 years, with at least 10% of total project costs from the buyer in a complete change of ownership and a personal guarantee from every 20% owner. Because SBA prohibits earnouts, the retention-based pricing common in practice sales has to be rebuilt as a fixed price, often with a seller note. Lenders underwrite client retention above all, then who may legally own the firm, the staff, and cash that arrives mostly in tax season.
- Usual loan
- SBA 7(a) up to $5 million; conventional debt for larger firms and roll-ups
- Buyer equity (SBA, complete change of ownership)
- At least 10% of total project costs
- Pricing constraint under SBA
- No earnout: a price tied to client retention after closing has to be restructured
- Seller transition (SBA)
- Consulting up to 12 months; up to 24 months under SOP 50 10 8.1 from 1 October 2026
- What lenders probe hardest
- Client retention, recurring vs seasonal fees, ownership licensing, staff, the buyer's credentials
Nothing to repossess: why the credit is the clients
An accounting firm owns computers, software licenses and perhaps an office lease. Its receivables and work in progress are modest. Almost everything a buyer pays for is the client list and the trust behind it. That means a lender financing the purchase has very little collateral to fall back on, and it knows it. The loan is repaid from fees billed to clients who were brought in by someone else, so the whole credit comes down to one question: how many of the seller's clients will stay with the buyer through the next two filing seasons?
Lenders are comfortable with this because accounting clients are, in practice, among the stickiest customers in small business. Changing accountants is a nuisance, and most clients do not do it without a reason. What causes attrition in a practice sale is predictable: a rushed handover, a fee increase in the first season, a change in who does the work, or a buyer whose services do not fit the clients. The file should show how the buyer avoids each. The SBA lending data for offices of certified public accountants shows how SBA lenders have financed the profession and how acquisition loans there compare with the program as a whole.
Because there is so little hard collateral, SBA lenders will take what is available, which can include a lien on the buyer's home where business assets fall short (see SBA personal residence collateral), and they commonly ask for life insurance on the buyer, since the practice depends on one person; see key-person life insurance.
Which fees a lender counts, and how
| Fee type | How a lender reads it | What proves it |
|---|---|---|
| Monthly bookkeeping, accounting and advisory retainers | The strongest revenue: billed every month, spread through the year, and tied to ongoing work | Billing by client by month; engagement letters |
| Individual tax returns | Recurring and sticky, but concentrated in the filing season and sensitive to price changes after a sale | Return counts and fees by client across several years |
| Business tax returns | Recurring, and often the anchor of a broader relationship with the owner | Fees by client; which clients also buy bookkeeping or payroll |
| Audit, review and other attest work | Valuable, but requires a licensed firm and ties to a small number of engagements; lenders look at concentration | Engagement list, fees per engagement, the firm's registration and peer review |
| Payroll services | Recurring and monthly; depends on the software and processes transferring cleanly | Client count and monthly billing |
| Tax resolution, one-off consulting | Real revenue, but not counted on to recur | Fees by year and by client |
Lenders also look at how concentrated the fees are. A practice where a handful of business clients, or one audit engagement, account for a large share of billing carries a risk that a practice of many small individual returns does not. See customer concentration in an acquisition.
Who is allowed to own the firm
State boards of accountancy regulate firms, not only individuals. In most states a firm that calls itself a CPA firm or performs attest work must be registered and majority-owned by licensed CPAs, and attest work carries peer review requirements. The details vary by state. For financing, this has two consequences. A buyer who is a CPA can generally buy the whole practice, including any attest work. A buyer who is not a CPA, such as a searcher, can typically buy a tax, bookkeeping and advisory practice, but cannot buy the attest side or use the CPA title in the firm's name without a structure that meets the state's rules.
Lenders will ask which of these the buyer is doing, and they will want the answer confirmed by counsel before closing. The same applies to the firm's name: a practice named after the seller may need to change its name, which is a retention question as much as a legal one. How lenders weigh the buyer's own background is covered in whether lenders require industry experience.
Confidentiality rules shape diligence too. Accountants and tax preparers are restricted in what client information they can disclose without consent, so sellers usually share client data in aggregate or without names until closing, and clients are told of the transfer, or asked to consent, as part of the handover. Lenders who finance practice sales are used to underwriting from anonymized client lists; what they need is fees by client, by year, so retention can be measured.
Retention-based pricing and the SBA earnout ban
Accounting practices have long been sold on terms that tie the seller's payments to the clients who actually stay: the buyer pays over time, and the price moves with the fees collected from the seller's clients after closing. It is a sensible way to share the retention risk. It is also, in SBA's terms, an earnout, and SBA prohibits an earnout to the seller in a change of ownership it finances. A buyer using an SBA loan has to settle the price at closing.
| Pricing mechanism | With an SBA 7(a) loan | With conventional senior debt |
|---|---|---|
| Fixed price paid at closing | Allowed; the standard structure | Allowed |
| Seller note on full standby | Counts toward the equity injection, for up to half of it, if no principal or interest is paid for the life of the SBA loan | Uncommon; senior lenders usually allow a subordinated note to pay |
| Seller note paid currently | Allowed, but it is debt: it counts in debt service, not toward the injection | Allowed, subordinated to the senior lender |
| Payments that depend on clients retained or fees collected after closing | Not allowed: this is an earnout | Possible, subordinated to the senior lender and built into coverage |
| Seller stays on as a partner or employee | Not allowed in a complete change of ownership; the seller may consult for up to 12 months (24 months from 1 October 2026) | Negotiable |
Buyers sometimes ask whether a seller note can simply be reduced if clients leave. Treat any mechanism that makes the price depend on what happens after closing as the contingent payment SBA does not allow, and settle the question with the lender before the letter of intent is signed. The usual SBA answer to retention risk is a lower fixed price, a seller note that gives the seller a reason to make the handover work, and a strong transition plan. More in how earnouts interact with acquisition debt and seller notes and SBA's full-standby rule.
The transition window, and why October 2026 helps
Clients move with introductions, not letters. A seller who calls the important clients, sits in on the first meetings and signs the first returns alongside the buyer makes retention far more likely. Under SBA rules the seller cannot stay as an owner, officer or employee after a complete change of ownership, but may consult for up to 12 months. That covers one filing season. For loans made under SOP 50 10 8.1 from 1 October 2026, the consulting period extends to up to 24 months, which covers two, and fits how accounting clients actually transfer. Buyers closing around that date should ask their lender which rules the loan will be made under.
The same revision brings other changes that apply to practice purchases: a change of ownership must show 1.25x debt service coverage on historical results, the loan amortizes over no more than 10 years except for any real estate, financial due diligence is required on every change of ownership, and a quality of earnings report on acquisitions of $3 million or more excluding real estate. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, SBA also requires an independent business valuation, and the loan for the purchase cannot exceed it; see the SBA business valuation requirement.
The seller's consulting agreement is not a formality in an accounting practice. It is the retention plan, and lenders read it that way.
Tax-season cash and the staff who produce it
Many practices collect most of their fees between the start of the filing season and the extension deadlines, and bill far less in the summer. Loan payments are monthly. Lenders therefore look at cash by month, and at whether the buyer will have enough working capital to carry payroll and debt service through the quiet months, especially in the first year, when the buyer has not yet collected a full season. A working capital line can bridge the gap; see lines of credit for accounting firms.
A practice also depends on the preparers and managers who carry the work in busy season. Qualified staff are hard to replace, so lenders ask who is staying, whether key staff have signed non-solicitation agreements, and how the buyer will handle the first season's volume. A simple case in plain numbers shows why: a practice with earnings available for debt service of 300 against payments of 240 covers them at 1.25x. If clients billing 100 leave and the staff who served them are still on payroll, earnings can fall to 230, which no longer covers the payments at all.
What goes in the file
The standard acquisition documents apply, set out in what lenders need to finance an acquisition: the practice's business tax returns for two to three years, its P&L and balance sheet, its latest full year of figures (never an older year), a year-to-date P&L, the debt schedule, the signed letter of intent, and each 20% owner's personal tax returns and personal financial statement. The buyer's resume matters more than usual here, since it supports SBA Form 1919's management experience. For an accounting practice, add:
- Fees by client (anonymized if necessary) for at least the last two full years, so retention can be measured.
- Revenue by service line and by month.
- A staff roster with roles, credentials and tenure, and any non-solicitation agreements.
- The firm's registration and, if it performs attest work, its peer review status, and the buyer's plan for ownership that meets the state's rules.
- The seller's transition and consulting plan.
Once those are in, Transparent builds the lender package, the financing model, lender presentation, blind teaser and underwriting memo, in a day, with the retention analysis a practice lender needs, and takes it to the lenders in its book that finance professional practices. Buyers adding a practice to a firm they already own should also read financing add-on acquisitions; what the package contains is on the package.
Common questions
- Do I have to be a CPA to buy an accounting firm?
- To buy a firm that uses the CPA title or performs audits and other attest work, generally yes, or at least the ownership must meet the state's CPA-majority rules. A buyer who is not a CPA can typically buy a tax, bookkeeping and advisory practice. Rules vary by state, and lenders will want the structure confirmed before closing.
- Can I use a retention-based purchase price with an SBA loan?
- No. A price that depends on clients retained or fees collected after closing is an earnout, and SBA prohibits earnouts to the seller in a change of ownership it finances. The price has to be fixed at closing; seller notes are allowed within SBA's rules.
- How long can the seller help with the transition?
- In an SBA-financed complete change of ownership, the seller may consult for up to 12 months, or up to 24 months for loans made under SOP 50 10 8.1 from 1 October 2026. The seller cannot stay on as an owner, officer or employee.
- What collateral does a lender take on a practice with no hard assets?
- Everything the business has, which is usually modest, and SBA lenders are required to take available collateral, which can include the buyer's home where business assets fall short. Lenders also commonly require life insurance on the buyer. A shortfall in collateral alone is not normally a reason to decline if the cash flow supports the loan.
- Can a tax preparation practice without a CPA be financed the same way?
- Largely, yes, though a practice that earns almost all of its fees in the filing season is underwritten with closer attention to monthly cash. See financing a tax preparation business.