SBA loans in Washington: an acquisition market, and what lenders ask of it

More buyers, fewer start-ups

Two figures set Washington apart. Acquisitions made up 14.5% of 7(a) loans, well above the national share of 10.4%, and start-ups only 9.9%. Put together, Washington's SBA market leans toward established businesses changing hands. Franchises were a modest 7.6% of loans.

The size profile follows. The median loan matched the country at $150,000, and 45.6% of loans went through SBA Express, the small-loan program. But the middle half of loans ran up to $500,000, one loan in ten was larger than $1,485,900, and 716 loans, 14.9% of the total, were for $1 million or more. The median acquisition loan, $727,050, was nearly five times the state's median loan.

How a Washington acquisition file is judged

The rules are federal. The buyer puts in equity of at least 10% of total project costs. A seller note can count for up to half of that only on full standby, meaning no principal or interest payments for the life of the SBA loan, and SBA prohibits an earnout to the seller. The seller may consult for up to 12 months after closing, or up to 24 months under SOP 50 10 8.1 from 1 October 2026, but may not stay on as an owner, officer or employee. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, an independent valuation is required, and the loan cannot exceed it.

From 1 October 2026 the bar rises for every change of ownership. The deal must show 1.25x debt service coverage on historical results, not projections; financial due diligence is required on every deal; and acquisitions of $3 million or more, excluding real estate, need a quality of earnings report. Goodwill and working capital amortize over no more than 10 years; only a real estate share can run longer. The due diligence requirement reaches every Washington acquisition, whatever its size; the quality of earnings threshold catches only the largest. See quality of earnings for acquisition loans and how SBA 7(a) finances an acquisition.

One Washington detail matters in the recast. The state's business and occupation tax is levied on gross receipts, not profit, so it is a real operating cost that rises with sales. It is not an add-back. A seller's figures that leave it out, or a buyer's model that forgets it, will overstate earnings, and a lender's analyst will catch it. A target earning 1,250 against new payments of 1,000 is exactly at 1.25x; a gross receipts tax quietly left out can be the difference between that and a decline. EBITDA add-backs covers what lenders accept.

Gas stations and convenience stores

Washington's top five SBA industries by loan count were full-service restaurants (286 loans), limited-service restaurants (178), residential remodelers (161), gasoline stations with convenience stores (153) and fitness and recreational sports centers (105). The fourth is the one with the most distinctive underwriting.

• Environmental work comes first. Underground fuel tanks make environmental condition the gating item. Lenders expect an environmental site assessment, and a record of tank testing, upgrades and any past releases. Evidence of the tanks' insurance or other financial responsibility is part of the file.
• Fuel is volume, the store is margin. Lenders separate fuel gallons and margin from inside sales, because a fuel margin is thin and volatile. A gross receipts tax lands on the fuel dollars too, which is why the state tax line matters more here than in most businesses.
• The supply agreement. A branded station operates under a fuel supply contract with its own term, volume commitments and change-of-ownership consent. A buyer needs it assigned or replaced before closing.
• Real estate. Most station deals include the land. A 7(a) loan can carry real estate for up to 25 years, and 504 is built for owner-occupied property; a blended maturity lowers the payment.

Financing a gas station acquisition and SBA loans for gas stations go further. For restaurants and gyms, see full-service restaurants and fitness centers.

A wide rate band means the lender matters

The median Washington rate matched the country at 10.25%, but the middle half of loans spanned 9% to 11.75%, nearly three points. Part of that is loan size: SBA's cap on a variable rate is the base rate plus 6.5% for loans of $50,000 or less, plus 6% up to $250,000, plus 4.5% up to $350,000 and plus 3% above that, and Washington lends at every level. Part is lender choice: within the same cap, lenders differ in how close to the ceiling they price, and 156 lenders approved Washington loans. On a loan of 1,000, two points is 20 a year in interest.

Only 12% of Washington loans were fixed-rate. Most borrowers carry a rate that moves with the base rate, which is worth modeling before signing: a deal that covers comfortably today should still cover if rates rise. Fixed vs variable rate and SBA loan rates explain the trade-offs.

Community property and the personal guarantee

Every owner of 20% or more personally guarantees an SBA loan. Washington is a community property state, so lenders commonly ask a guarantor's spouse to sign documents that let them reach community assets, even where the spouse owns none of the business. Buyers who are married, and partnerships of several families buying together, should plan for spousal signatures at the start, not discover them at closing. On larger loans, SBA also expects lenders to take available equity in the owners' personal real estate when business assets do not fully secure the loan, which can bring a spouse into the documents too. See spouse personal guarantee and personal guarantees on acquisition loans.

SBA or conventional in Washington

For a goodwill-heavy acquisition, SBA's 10% minimum equity and 10-year term are hard for a conventional lender to match. Where a company already has strong earnings and hard assets, banks commonly look for coverage of at least 1.25x and may lend without SBA's guaranty fee and eligibility review. Above $5 million, 7(a) stops; senior cash-flow lenders commonly lend 2x to 3.5x EBITDA, and a buyer may combine SBA with a conventional piece. See SBA 7(a) vs a conventional acquisition loan and acquisitions above the SBA limit.

Transparent's lender book holds 1,800+ lenders, including 278 that write SBA 7(a) and 504 and 1,148 that write conventional term and private credit, so both routes can be tested on the same file.

Preparing a Washington file

• The SBA core: two to three years of business and personal tax returns, a P&L, balance sheet, debt schedule with copies of notes being refinanced, and a personal financial statement for each 20%+ owner
• For an acquisition: the target's latest full year of figures, never an older year, and the letter of intent
• A recast that keeps the gross receipts tax in operating costs
• For a gas station: environmental reports, tank records and the fuel supply agreement
• The marital status of each guarantor, so spousal signatures are planned

Once those documents are in, Transparent builds the full lender package, a financing model, lender presentation, blind teaser and underwriting memo, in a day; by hand it takes at least a week. Transparent charges nothing before a loan closes, and on SBA loans the lender pays Transparent, not the borrower. The package shows what lenders receive.