Building material dealers took 322 SBA 7(a) loans between October 2023 and June 2026, $259 million from 121 lenders. These are large loans for the program: a median of $350,000 against the national $150,300, and 80 loans (24.8%) of $1 million or more. Acquisitions were 22.4% of loans, more than twice the national 10.4%, at a median of $915,500 and 9.25%. Lenders underwrite a dealer like a distributor with real estate: contractor receivables, inventory, the yard, and how earnings held up through the building cycle.
| Measure | Other Building Material Dealers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 322 | 162,355 |
| Median loan | $350,000 | $150,300 |
| Middle half of loans | $150,000 – $996,425 | $50,000 – $500,000 |
| Loans of $1 million or more | 24.8% | 12.9% |
| Median rate at approval | 10% | 10.25% |
| Middle half of rates | 8.75% – 11.25% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 72 (22.4%) | 16,849 (10.4%) |
| Median acquisition loan | $915,500 | $693,000 |
| Lenders that made these loans | 121 | 1,648 |
| SBA 504 loans (real estate, equipment) | 67 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 322 (Oct 2023 – Jun 2026)
- Lenders that approved one
- 121
- Median loan
- $350,000 (national $150,300)
- Loans of $1 million or more
- 80 (24.8%)
- Acquisitions
- 72 loans (22.4%), median $915,500
- SBA 504
- 67 loans, median $1,040,000
Big loans, and a lot of ownership changes
NAICS 444180 covers building material dealers other than home centers and paint stores: independent lumber yards, roofing and siding suppliers, masonry and concrete block yards, door and window dealers, drywall and insulation suppliers selling to contractors and the public. From 1 October 2023 to 30 June 2026 they took 322 SBA 7(a) loans worth $259,416,100 from 121 lenders.
Every size figure is high. The median loan was more than twice the national median, the middle half ran from $150,000 to $996,425, and the top tenth started at $2,076,030. A quarter of the loans were $1 million or more. The median business supported 6 jobs. This is an industry of established companies with real balance sheets, and SBA lenders treat it that way: the median rate was 10%, below the national 10.25%.
| Figure | Building material dealers | National | Reading |
|---|---|---|---|
| Median loan | $350,000 | $150,300 | Businesses with inventory, trucks and yards |
| Middle half | $150,000 to $996,425 | Most loans need a full 7(a) underwrite | |
| Top tenth starts at | $2,076,030 | Company purchases with real estate | |
| Median rate | 10% (middle half 8.75% to 11.25%) | 10.25% | Larger, collateralized loans price lower |
| Acquisitions | 72 loans (22.4%), median $915,500 at 9.25% | 10.4% of loans | Succession is the main use of SBA here |
| Start-ups | 7.8% of loans | Few new yards: the capital cost is high | |
| Franchises | 3.7% of loans | Some dealer networks and branded programs | |
| SBA Express | 34.8% of loans | Lines and smaller working-capital needs | |
| SBA 504 | 67 loans, median $1,040,000 | Yards and warehouses bought on 504 |
Why so many of these loans buy a business
72 of the 322 loans financed a change of ownership. Independent yards are very often family businesses, a generation or two old, with owners reaching retirement and no heir who wants the business. A key employee, a competitor across the county or an outside buyer steps in, and SBA is the natural lender: the purchase includes goodwill that a conventional bank will not lend much against, and the seller often owns the yard as well.
That combination shapes the loan. The business and the real estate can go into one 7(a) loan, with the real estate share on a term of up to 25 years and the rest on up to 10; see SBA blended maturity and business acquisitions with real estate. From 1 October 2026, change-of-ownership loans amortize over no more than 10 years except the real estate share, so buying the yard with the business becomes one of the few ways to stretch the payment.
The rest of SBA's acquisition rules apply. The buyer injects at least 10% of total project costs; a seller note counts toward half of it only on full standby for the life of the loan; SBA prohibits an earnout to the seller, so a price tied to next season's contractor sales has to be settled at closing; the seller may consult for up to 12 months (up to 24 months under SOP 50 10 8.1 from 1 October 2026) but not stay on as an owner or employee. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, an independent valuation is required, and the loan for the purchase cannot exceed it. From 1 October 2026, every change of ownership needs financial due diligence, a quality of earnings report is required on acquisitions of $3 million or more excluding real estate, and coverage must reach 1.25x on historical results.
A larger yard with its real estate can outgrow SBA's $5 million limit. Then the deal splits between SBA and conventional or asset-based lenders, or leaves SBA altogether.
Reading a dealer's balance sheet
Most small businesses are underwritten on cash flow with collateral as an afterthought. A building material dealer has enough assets that the collateral becomes part of the argument, and the lender will value each class differently.
| Asset | How lenders tend to value it | What lowers the value |
|---|---|---|
| Contractor receivables | Asset-based lenders typically advance 80% to 90% of eligible receivables | Invoices more than 90 days old; one builder above 20% to 25% of the total |
| Inventory | Up to 85% of net orderly liquidation value, or roughly half of cost | Slow-moving special orders, obsolete lines, commodity price drops |
| Yard and buildings | Appraised value; 7(a) terms up to 25 years, or 504 | Environmental history, special-purpose layout |
| Trucks, forklifts, boom trucks | Appraised orderly liquidation value; terms up to 10 years, 15 if useful life supports it | Age, hours, deferred maintenance |
Contractor receivables deserve attention. Dealers extend trade credit to builders, and a builder in trouble pays suppliers last. Lenders will read the receivables aging by customer, ask how the dealer uses its lien rights, and look hard at any builder who is a large share of sales. Inventory is the other judgement call: lumber and panel prices move sharply, and a yard that bought at a peak can see its inventory lose value before it sells. See inventory advance rates.
Working capital: the loan after the loan
Dealers buy ahead of the building season and collect after it. Spring purchases are paid for from summer and fall collections, and a growing dealer can be profitable and short of cash at the same time. The term loan that buys the business does not solve that; a revolving line does.
A worked example: a dealer stocks up with 400 of inventory in March, sells it on 30-day terms through May, and collects most of it by July. For four months, the dealer has funded 400 it will get back. A line of credit sized to that swing, borrowed in spring and repaid by fall, is cheaper than carrying the peak in a term loan all year. SBA offers this through CAPLines; larger dealers use an asset-based line against receivables and inventory, and Transparent's book holds 235 lenders that write asset-based loans and lines. In an acquisition, lenders will also want to see enough working capital at close that the buyer is not borrowing on day one to restock.
What lenders worry about in this trade
- The building cycle. Sales follow housing starts and remodeling, both of which swing with interest rates. Lenders read several years of figures, not just the last, to see how the dealer did in a down year.
- Builder concentration. A dealer whose top builder is a large share of sales carries that builder's risk. See customer concentration in acquisitions.
- Margin pressure. Big-box and national distributors compete on commodity products. Lenders want to know what the dealer sells that they don't: service, delivery, special orders, contractor relationships.
- Key people. Contractor accounts often follow the outside salesperson or the owner. In a purchase, the lender asks who holds those relationships and whether they are staying.
Buying the yard on 504
Lenders approved 67 SBA 504 loans in this industry at a median of $1,040,000, the program's answer to a dealer buying or expanding its yard, warehouse or showroom. The usual structure is 50% from a bank, 40% from a certified development company and 10% from the borrower (15% for a new business or special-purpose property). The dealer must occupy at least 51% of an existing building. Since July 2026, 504 and 7(a) limits are counted separately, so a dealer with a 7(a) loan for the business can still use 504 for the real estate. See SBA 7(a) vs 504.
Preparing a dealer's file
- Business tax returns for 2–3 years, personal returns and a personal financial statement for each 20%+ owner.
- A P&L, a year-to-date P&L through last month-end and a balance sheet.
- An accounts receivable aging by customer, with days outstanding, and an accounts payable aging.
- An inventory report by category, with slow-moving items identified.
- A debt schedule with existing liens and copies of notes being refinanced.
- For a purchase: the target's latest full year of figures and the letter of intent.
Once the documents are in, Transparent builds the full lender package, with the financing model, lender presentation, blind teaser and underwriting memo, in a day. Transparent charges nothing before a loan closes, and on SBA loans the lender pays Transparent, not the borrower.
Common questions
- Can I buy a lumber yard and its real estate with one SBA loan?
- Yes. A 7(a) loan can finance the business and the real estate together, with the real estate share on a term of up to 25 years. The whole loan is limited to $5 million.
- What if the purchase is bigger than SBA's $5 million limit?
- The deal is usually split: SBA or 504 for part, and a conventional, asset-based or private lender for the rest, or it moves outside SBA entirely. See acquisitions above the SBA limit.
- Will my inventory count as collateral?
- Yes, at a discount. Asset-based lenders typically advance up to 85% of net orderly liquidation value, or roughly half of cost, and give little or nothing for slow-moving or special-order stock.
- Do I need a quality of earnings report to buy a dealer?
- From 1 October 2026, SBA requires financial due diligence on every change of ownership and a quality of earnings report on acquisitions of $3 million or more excluding real estate.
- Can the seller carry part of the price?
- Yes. A seller note on full standby for the life of the SBA loan can count for up to half of the required equity injection, which is at least 10% of total project costs. A note that is being paid is debt and counts in debt service instead.