AdvisorLoans expertise with wealth management M&A?

Acquisitions and partner buyouts is over 70% of our loan volume by dollars funded. We have closed/funded hundreds acquisition loans for Wealth Advisors. We utilize our expertise and experience in acquisition loans to help our clients with best practices, work-arounds, and making the acquisition lending process easier.

How do I pre-qualify for an acquisition loan?

Call us for a free consultation, complete our application, and provide a few documents. We can generate SBA term sheet proposals in 1-2 days and conventional term sheet proposals in 2-7 business days.

Types of acquisitions lennding AdvisorLoans handles?

Internal – Within the same broker dealer or custodian platform

External – Acquiring a practice at a different broker dealer or custodial platform

Complete Asset Purchase (100% client acquisition)

Partial Asset Purchase (acquiring less than 50% of seller’s clients)

Complete Equity Purchase (100% equity/stock purchase)

Partial Equity Purchase (partial equity buy-in or buy-out)

Our lending options for an acquisition loan?

AdvisorLoans helps advisors with acquisition loans using conventional and SBA lending, and sometimes in combination.

What about partner buyout loans?

A partner buyout loan finances the purchase of a partner’s equity in a business, allowing you to increase your ownership stake, either fully or partially. This loan type purpose is to fund the acquisition of a partner’s equity to achieve complete ownership (100%) or partial ownership (less than 100%), covering the purchase price and related costs.

Complete Partner Buyout: A complete partner buyout is an existing shareholder purchasing the equity owned by a partner resulting in the buyer owning 100% of the equity.

Partial Partner Buyout: A partial partner buyout is an existing shareholder purchasing equity owned by a partner resulting in the buyer owning less than 100% of the total equity.

Equity Buy-in: An equity buy-in is when a non-shareholder purchasing equity resulting in the buyer owning less than 100% of the total equity.

What is the SBA's 12 month seller continuation rule?

The SBA requires that the seller may not remain an employee or as an officer, director, stockholder, or employee of the business after the sale. They can consult on a 1099 basis for up to 12 months post-sale. This rule does not apply to a seller simply selling a partial client list to another advisor, nor prohibits an advisor to continue as a licensed advisor for a broker dealer or custodian that could continue doing split business on new clients brought in.

What are conventional equity injections?

Conventional: An equity injection demonstrates your commitment, or “skin in the game,” to the deal. This contribution reduces lender risk which is paramount for the loans not partially guaranteed by the SBA.

While a borrower’s personal financial situation and credit profile have significant influence, the primary equity injection criteria from conventional lenders is the Loan-to-Value (LTV) ratio. Typically, conventional lenders cap LTV at 75%, although some may extend to 85%.

For acquisitions, LTV is calculated by combining the value of the buyer's and seller's practices, resulting in most conventional acquisition deals meeting the LTV requirement. If a $1M value practice acquires a $1M value practice then $1M loan/$2M value = 50% LTV.

When a $333,000 value practice acquires $1M value practice then $1M/$1,333,000 = 75% LTV. In this case an equity injection (down payment and/or seller financing) is not required based on LTV but the lender may have other reasons they may want to see "some level" of injection (5%-10%).

What are SBA equity injections?

Equity Injection for SBA Loans When financing a business acquisition through an SBA loan, such as purchasing an international trade company or a franchise, an equity injection demonstrates your commitment, or “skin in the game,” to the deal. Per the SBA SOP 50 10 8 (effective June 1, 2025), equity injection rules apply to change of ownership loans, with specific requirements for partner buyouts, business acquisitions, and exceptions for expansion loans.

What Is an Equity Injection? An equity injection is the borrower’s or seller’s contribution of cash or assets to a change of ownership loan, showing dedication to the transaction. It’s not tied to purchasing equity but to injecting resources to fund the deal.

Purpose: Covers 10% of total project costs (all costs to complete the transaction, e.g., purchase price, fees, working capital), not the loan amount, unless exemptions apply.

Sources: Borrower cash (e.g., savings, HELOC, gift), seller standby notes, or a combination, sourced outside the business’s existing balance sheet.

Example: For a $1M acquisition (total project costs), a $100,000 equity injection is required, via $50,000 cash and a $50,000 seller standby note.

What are change of ownership loans? A loan resulting in a change of ownership is when you are purchasing a business, assets or equity, whereby 100% of the ownership transfers from the seller to the buyer.

These include:

• A new business purchase loan
• An expansion business purchase loan
• And complete and partial partner buyouts.

SBA equity injection rules?

SBA loans for change of ownership (e.g., acquiring a business, assets, or equity with 100% ownership transfer) require a minimum 10% equity injection of total project costs, per SOP 50 10 8 (effective June 1, 2025), unless exemptions apply. LoanBox ensures your loan package meets these standards for a seamless process.

Change of Ownership Loans:

Types: Include new business purchases, expansion acquisitions, and complete/partial partner buyouts.

Requirement: A 10% equity injection of total project costs (e.g., purchase price, fees, working capital), sourced from:

Cash: Paid by the borrower (e.g., savings, Home Equity Line of Credit, gifts with a gift letter), verified by recent account statements.

Seller Note: Seller financing on full standby (no principal or interest payments for the entire 7(a) loan term) can cover up to 50% of the injection (e.g., $50,000 for a $1M deal with a $100,000 injection).

Assets: Non-cash assets (e.g., equipment) may count if independently appraised above net book value.

Seller Note Restrictions: Must be subordinated to the SBA loan, with no acceleration clauses. Partial standby notes with interest-only payments are not permitted.

Example: A $1.5M business purchase (total project costs) requires a $150,000 injection, met with $75,000 cash and a $75,000 seller standby note on full standby for the loan term.

Injections for Business Acquisitions?

Business acquisitions (new or expansion purchases) follow standard SBA equity injection rules.

Equity Injection Sources:

Cash Payment: Paid by the borrower, typically wired to the lender or escrow account 1–2 weeks before closing, from savings, investments, Home Equity Line of Credit (HELOC), or gifts (with a gift letter confirming no repayment obligation). Lenders verify with recent account statements.

Full Standby Note: Seller financing covers up to 50% of the 10% injection (e.g., $100,000 for a $2M acquisition with a $200,000 injection), with no principal or interest payments for the entire 7(a) loan term, subordinated to the SBA loan with no acceleration clauses.

Assets: Non-cash assets (e.g., equipment) may count if independently appraised above net book value.

Restriction: Partial standby notes with interest-only payments are not permitted. Seller notes exceeding 50% of the injection are ineligible.

Example: A $2M acquisition (total project costs) requires a $200,000 injection, met with $100,000 cash and a $100,000 seller standby note on full standby for the loan term.

Exception for Expansion Loans?

Expansion loans through acquisition may be exempt from equity injection, easing financing for growth.

Expansion Acquisition Exemption:

No Injection Required if:

• Target business is in the same 6-digit NAICS code as the existing business.

• Located in the same geographic area (e.g., same metropolitan region).

• Has identical ownership structure (same owners, percentages).

Otherwise: Standard 10% equity injection applies.

Example: An advisor who is 100% owner of a single member LCC acquires another advisor’s book or practice with the same ownership.

Equity Injection Sources?:

Acceptable Sources:

Savings: Personal or business savings (outside the acquired business’s balance sheet), verified by bank statements.

Liquidated Investments: Proceeds from sold stocks, bonds, or other assets, documented by investment account records.

Gifts: Funds from a third party (e.g., family), requiring a gift letter confirming no repayment obligation.

HELOC: Funds from a Home Equity Line of Credit, verified by loan statements.

Unacceptable Sources: Funds from the acquired business’s existing balance sheet or borrowed funds (except HELOC or seller standby notes). Franchise fees do not count as the equity injection, even for startups; they’re included in total project costs (e.g., fees, equipment, working capital), but the 10% injection must be separate.

Project Costs Context: The equity injection covers 10% of total project costs (purchase price, fees, working capital, etc.), not just a “down payment” toward the purchase price (Paragraph D.2.a).

Verification: Lenders require recent account statements (e.g., bank, investment, HELOC) to confirm the source’s legitimacy and availability. If funds come from multiple sources, each must be documented (e.g., separate statements for savings and HELOC). No fixed timeframe (e.g., two months) is mandated by SBA, but lenders typically request statements covering recent activity.

Acquisition loan if I am currently a W-2 advisor?

Typically, yes.

Acquisition loan if I am a 1099 advisor without production?

Typically, yes.

Cost of purchase agreements?

We can refer you to lawyers with expertise and experience in advisor acquisition purchase agreements. For most acquisitions, the lawyer fees for the purchase documents and exhibits costs between $2500 and $4500.

Typically cost for a third party escrow?

Some lenders will handle any escrow provisions interally and others will require a third party escrow firm. Escrow firms vary in pricing strucutre. Some charge a lower fee like $750 to $1000 for a single disbursement after one year but then gets more expensive if there are multiple disbursements and years. Some will charge a flat fee like $2000 to $2,500 for unlimited disbursements and years.