The 90% SBA Loan Guarantee Nobody Tells You About

Why Lenders Love 90% Coverage

Let's do the basic math on a $3M acquisition loan:

Standard 7(a) structure:

• $3M total loan

• 75% SBA guarantee = $2.25M covered

• Lender's exposure = $750K

Export 7(a) structure:

• $3M total loan

• 90% SBA guarantee = $2.7M covered

• Lender's exposure = $300K

The lender just cut their risk by more than half. That changes everything about how they approach the deal.

When a lender has $300K at risk instead of $750K, they get more comfortable with:

• Pushing leverage multiples higher (often 0.5x more)

• Better pricing (typically 25-50 basis points)

• More flexible working capital components

• Looser covenant structures

Here's what this looks like in a real deal:

Company profile: $5M revenue, $1M EBITDA, buying a competitor

Standard 7(a) approach:

• 3.5x leverage = $3.5M financing

• 75% guarantee

• Buyer needs $1.5M equity

Export 7(a) approach:

• 4.0x leverage = $4M financing

• 90% guarantee

• Buyer needs $1M equity

That extra $500K in leverage means $500K less equity required. No dilution from bringing in partners. Just better loan terms because the SBA is covering more of the downside.

The "Credible Plan" Reality

Here's the part that surprises everyone: you don't need to be exporting already.

You just need a credible plan to start exporting in the next 12-24 months.

The bar for "credible" is lower than you think. You need to demonstrate:

• Specific target markets you're considering

• A product or service that logically extends internationally

• A reasonable timeline (12-24 months is the sweet spot)

• Some basic evidence of demand or market opportunity

You don't need contracts. You don't need letters of intent. You don't need to have it all figured out.

Here are three pathways to qualify:

1. Selling products to international customers

This is the obvious one. E-commerce brands expanding to Canada or EU. Manufacturers developing distributor relationships in Mexico. B2B products targeting specific foreign markets.

If you can show that customers in another country would logically buy what you sell, you're 80% of the way there.

2. Expanding service offerings to foreign markets

Software companies selling internationally. Professional services firms opening offices abroad. Consulting practices targeting foreign clients.

Remote delivery models work fine here. You don't need physical presence.

3. Developing supply chains with international components

This is the broadest category. Sourcing raw materials from international suppliers. Building relationships with foreign vendors. Creating supply chains that depend on international trade.

A manufacturing company that sources 30% of inputs from overseas suppliers and wants to increase that to 50%? That qualifies.

What doesn't work:

• Vague "we might export someday" without specifics

• No logical business reason for international expansion

• Target markets that make no sense for your product

The key is having a defensible answer to "why would this business benefit from international expansion?" If you can articulate that clearly, you're probably fine.

Who Should Explore This

This structure makes most sense for:

Industries with natural international fit:

• Manufacturing and distribution

• Wholesale and B2B products

• Software and technology

• Professional services

• Specialized equipment or components

Deals where it matters most:

• A big portion of the loan is an “airball” (i.e. not collateralized)

• You need that extra $500K-$1M to make the math work

• Every 0.25x of leverage impacts your return profile

• Reducing equity requirement is critical

When it probably doesn't matter:

• You're over collateralized

• Business is purely domestic/local (retail, restaurants)

• No logical path to international business

• Adding $500K to the structure doesn't change your decision

The Process

Timeline is similar to standard 7(a) financing, typically 60-90 days. The documentation is slightly heavier since you need to articulate your export plan and provide some market analysis.

Not every SBA lender knows this program well. You need to work with lenders who have experience with export financing and understand how to present the deal to the SBA.

The extra paperwork is worth it when you're talking about $500K-$1M in additional leverage or meaningfully better terms.

Bottom Line

If your deal is tight on leverage or low on collateral, look for an export angle. The credible plan requirement is more flexible than most people realize.

That 90% guarantee changes lender behavior in material ways. Less risk for them means better terms for you.

Most buyers don't know this program exists. The ones who do have an edge in competitive processes and can structure deals that others can't make work.

Work backward from the question: can you create a defensible export plan for the business you're buying? If the answer is yes, you're probably leaving better terms on the table with standard 7(a) financing.

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