By Tully Ryan, CEO, IQExit / Murphy Business M&A Advisor 

Effective this month, the SBA doubled its cumulative 7(a) and 504 loan limit to $10 million, the highest combined borrowing ceiling in the agency's history. Decoupling the two programs means a qualified buyer can now access up to $5 million through 7(a) and another $5 million through 504, simultaneously, for deals that used to run into a shared $5 million wall. 

For lenders, brokers, and acquisition entrepreneurs, that's a real expansion. Deals that previously had to leave the SBA umbrella for a second lien, a mezzanine piece, or a seller note covering the gap can now stay inside a single guarantee structure. Buyers chasing $6–10 million enterprise value businesses just got a wider lane. 

I've spent the past few weeks fielding questions from advisors and buyers about what this means for deal flow in our region. The questions are good ones. But almost none of them are about supply. They're all about demand. And that's backwards, because demand for capital was never the constraint holding this market back. 

The Buyer Pool Just Got Bigger. The Seller Pool Didn't Move. 

According to McKinsey, roughly six million U.S. businesses are projected to change hands by 2035, representing somewhere between $14 trillion and $25 trillion in enterprise value depending on whose model you use. Private equity alone is sitting on more than $2 trillion in dry powder looking for a home. Now layer in an SBA program that just made debt financing easier to stack for the lower middle market, and on paper, this should be the best year in a generation to sell a business. 

Here's the part that doesn't show up in the SBA's press release: only 20–30% of businesses that go to market with an intermediary actually sell. McKinsey puts the number for unassisted sellers closer to 5%. That gap has nothing to do with the cost or availability of capital. It has to do with what's on the other side of the table when the buyer's team shows up. 

I've watched this play out from the sell side more times than I can count. A buyer's diligence team — financial analyst, quality of earnings specialist, transaction attorney who has run this process a hundred times — arrives expecting clean, defensible numbers. What they often find instead is a bookkeeper's general ledger, three years of financials that don't reconcile to a consistent EBITDA story, customer concentration nobody flagged in advance, and an owner who is, functionally, the business. That's not a financing problem. That's a readiness problem. And no loan program fixes it. 

Capital Was Never What Killed These Deals 

I took over a sell-side engagement for a pest control and lawn care company after a previous deal had fallen apart. At a glance, things looked good. The company had strong recurring revenue on annual service contracts, route density that took years to build, and 22 years of a stellar reputation in the market.  

But once I looked under the hood, I saw a familiar situation: The owner who had done everything right as an operator hadn't done anything to prepare for what would happen after he decided to sell. Every customer relationship, every key vendor negotiation, and every pricing decision ran through him personally resulting in a  business that didn't run without him in the building. On top of that, his financials were a patchwork of QuickBooks entries and personal expenses run through the company that his bookkeeper had never cleaned up. Although he had gone under contract at asking price, when the buyer's team sat down to normalize EBITDA and model the business without its owner in it, things changed. There was a re-trading conversation that cost him $400,000. The deal died. Two years later, after we rebuilt the management structure so the business could run without him for thirty days at a time, and rebuilt the financials into something a buyer's team could actually underwrite, the business sold for a price the original buyer would have happily paid the first time. 

The capital was available both times. 

Compare that to a manufacturing client in the Piedmont who spent 36 months getting ready before going to market: shareholder loans resolved, a workers' comp claim settled, every customer contract current, three years of normalized, well-documented EBITDA. When the buyer's QofE team arrived, there were no surprises, because every question already had an answer. That deal closed above the owner's original expectations. 

Same capital markets. Same buyer pool. The difference was entirely on the seller's side of the table, and it was built 18 to 36 months before either business was ever listed. 

Why This Matters More, Not Less, Right Now 

It's tempting to read an SBA expansion as good news for sellers. It is, but only for the sellers who are ready to meet the buyers it's about to attract. A bigger, better-financed buyer pool doesn't make an unprepared seller more fundable. It makes the gap between prepared and unprepared sellers more visible, faster. Buyers with $10 million of accessible SBA-backed financing aren't going to slow down and wait for a seller's books to get clean. They're going to move to the next deal in the pipeline that's already clean. 

I'd also point lenders and CDCs to something in the fine print of this rule that owners and advisors should internalize: underwriting standards didn't loosen alongside the higher ceiling. A 1.10x minimum debt service coverage ratio, tightened citizenship requirements on ownership, and a sequencing requirement between the 7(a) and 504 pieces all still apply. More capital availability paired with the same or stricter credit discipline means the deals that get financed at the new $10 million ceiling will be the ones with the cleanest numbers, not just the biggest ambitions.  

That's the same lesson that's been true in every market cycle I've worked through: well-run, well-documented businesses sell regardless of what the macro environment is doing. This rule change just raises the size of business that lesson now applies to. 

The Real Opportunity Is Upstream 

For the CPAs, bankers, wealth advisors, and attorneys who sit alongside business owners, it is time to have the conversation you've been putting off. Nearly half of your client base may already be inside what I call the Exit Formation Window, the 36-to-60-month runway before a sale where problems are actually fixable. New SBA rules, new buyer capacity, a widening pool of $14 trillion looking for a place to land over the next decade does not change the impact of the readiness variable. It just raises the stakes for showing up unprepared. 

The advisors who bring this up now, proactively, before a listing conversation is even on the table, become the ones who shape the outcome of their client's largest financial event. The ones who wait find out a sale happened the way banks usually do — from a wire transfer, after all the good options are already gone. 

The SBA just made the buyer pool bigger. It didn't make the sellers ready. That work still takes time and focus, and it still starts with an honest look at the business through a buyer's eyes, long before a buyer is in the room. 

Tully Ryan is CEO of IQExit and a Murphy Business M&A Advisor based in Wilmington, NC. He serves business owners and the advisors — CPAs, bankers, wealth advisors, and attorneys — who sit alongside them. Tully welcomes questions, comments, and conversations from business owners and their advisors.