SBA loans for tax preparation services: buying and growing a tax practice

What SBA lenders approved for tax preparers

Tax preparation services (NAICS 541213) are firms whose main work is preparing individual and business returns without being a CPA practice: independent preparers, enrolled agents, and local offices of preparation brands. From FY2024 through June 2026 they took 675 SBA 7(a) loans worth $196,280,100 from 113 lenders, excluding cancelled loans. The median firm supported 3 jobs.

Loan sizes are modest but with a real upper tail: the middle half ran from $48,500 to $300,000, the 90th percentile was $720,600, and 44 loans, 6.5%, were $1 million or more. The median rate was 10.75%, but the upper end of the middle half reached 12.5%, which likely reflects smaller loans under SBA's higher caps being priced toward them.

Why lenders would rather finance a purchase than a start-up

Start-ups are only 2.1% of loans because a new tax office has nothing to lend against: no equipment to speak of, no receivables, and no clients until the first season proves there are some. An existing practice is different. Its clients return every year, its revenue can be traced return by return, and a buyer who already prepares taxes can step into it. That is why purchases, at 85 loans and a median of $490,000, are a large part of the bigger lending here. They priced at 9.75%, a full point under the industry median, helped by their size: loans above $350,000 fall under SBA's tightest rate cap.

What the buyer is paying for is the likelihood that clients file with the practice again. Lenders test it directly: client counts by year for several seasons, how many were new and how many were lost, revenue per return by type, and how many clients were served personally by the seller rather than by staff preparers. A practice where the seller signs most returns carries more risk than one where staff preparers already hold the relationships. See financing a tax preparation business acquisition.

Pricing a practice when SBA bans the earnout

Outside SBA, tax and accounting practices often change hands with part of the price tied to retention: the buyer pays more if clients stay and less if they leave. SBA prohibits an earnout to the seller in a change of ownership it finances, so the price must be fixed at closing, and the buyer carries the retention risk. The structures that remain each have a defined treatment:

The practical consequence is that the buyer's protection has to come from the price itself and from the diligence behind it. From 1 October 2026 SBA requires financial due diligence on every change of ownership and coverage of 1.25x on historical results, which pushes that diligence into the file whether the buyer wanted it or not. See earnouts and acquisition debt and seller notes and SBA's full-standby rule.

Under SBA, the tax practice's price is fixed at closing. Retention risk sits with the buyer, so it has to be priced in before the letter of intent.

The seller's transition and the filing season

In a complete change of ownership the seller cannot stay on as an owner, officer or employee, but may consult. Under current rules that window is up to 12 months, which covers one filing season. From 1 October 2026, SOP 50 10 8.1 extends it to up to 24 months, which can cover two. For a tax practice the difference matters: the second season is where clients who stayed out of loyalty to the seller decide whether to stay for the buyer.

Timing the closing around the season matters as much. A buyer who closes shortly before the season has the seller's help when clients first meet the new owner; one who closes after it pays a loan for months before the next season's revenue arrives. Sellers who want to keep preparing a few returns as an employee need to understand early that SBA does not allow it. See SBA seller transition.

Seasonal cash flow and the monthly payment

Most of a tax practice's revenue arrives in a few months, while an SBA loan is repaid monthly all year. Lenders test coverage on the annual figures, where SBA requires at least 1.15x and banks commonly look for 1.25x. A practice with annual cash available for debt service of 125 against payments of 100 meets the bank's line. But lenders also look at whether cash from the season carries the business through the rest of the year, by reading monthly bank balances.

For a buyer, that makes working capital at closing part of the loan request, not an afterthought; see working capital at close. An established firm that needs to carry staff and rent through the off-season may be better served by a seasonal line of credit, repaid from the season, than by a larger term loan.

Preparing a tax practice's file

SBA's list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with notes being refinanced, personal returns and a personal financial statement for each owner of 20% or more, and the owner's resume, which supports Form 1919. A buyer adds the letter of intent and the practice's latest full year of figures, never an older year.

Specific to this industry: return counts by type and year, client retention by season, revenue per return, the split of returns prepared by the seller and by staff, staff credentials, and any revenue from refund-related products or bookkeeping shown separately. IRS e-file authorization generally does not transfer with a practice, so a buyer should apply for their own well before the first season.

Transparent builds the file into a full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and puts it before the 278 lenders in its book that write SBA 7(a) and 504. On SBA loans the lender pays Transparent, not the borrower.