Last week, we walked through the final stretch leading up to your SBA loan closing. If you missed it, you can read the newsletter here.

This week, we're crossing the finish line together: what happens on closing day, what you're actually signing, and what comes next once the ink is dry and the funds hit.

Closing day is a big deal.

After months of searching, negotiating, underwriting, and paperwork, you're finally at the moment where the business officially becomes yours.

How Closings Actually Work

SBA loan closings happen in a few different ways.

Some are in person at a title company or attorney's office. Others are fully virtual with e-signatures and remote notarization.

Most fall somewhere in between:

A mix of digital signatures, a mobile notary showing up at your kitchen table, and maybe an overnight package for documents that need wet ink.

If your deal involves commercial real estate being purchased or refinanced, you'll almost always be closing at a title company. They handle the title search, coordinate the recording of documents, and manage the flow of funds.

Here's something that trips people up: the business purchase closing and the SBA loan closing are technically separate events, but they happen back-to-back (or simultaneously) and have to be carefully coordinated. Your closing attorney, lender, and sometimes the seller's team all need to be on the same page. When it works well, it feels seamless. When coordination breaks down, things get stressful fast.

Who's typically involved?

• You
• The lender or their counsel
• A closing attorney or escrow agent
• A notary
• Sometimes the seller.

Not everyone's always in the same room. But behind the scenes, a lot of moving parts have to come together.

What You're Actually Signing

Let's demystify that stack of documents.

The Promissory Note

This is the big one. It spells out your loan amount, interest rate, term, and repayment obligations. For variable-rate loans, it'll explain how your rate adjusts. Most SBA 7(a) loans tie to the Prime Rate and adjust quarterly. Read it carefully. This is your promise to pay.

Security Agreement and UCC Filing

These give the lender a security interest in your business assets. After you sign, the lender files a UCC-1 with the state, which is basically a public announcement that they have a lien on your stuff. It's standard practice; they'll typically take a blanket lien on all business assets including inventory, equipment, and receivables.

Mortgage or Deed of Trust

If real estate is part of the deal, or if you're pledging home equity as collateral, you'll sign a mortgage or deed of trust that gets recorded against the property. For loans over $500K, if you own real estate with 25%+ equity, the SBA generally requires it as collateral. If you have an existing mortgage, the SBA lender takes a junior position behind it.

Personal Guarantees

Everyone who owns 20% or more of the business has to personally guarantee the loan. No exceptions. This is an SBA requirement, not your lender being difficult. If no single person owns 20%+, at least one owner still has to sign. And if you and your spouse together own 20% or more, you're both on the hook.

The guarantee means exactly what it sounds like: if the business can't pay, you're personally responsible.

Equity Injection Verification

The lender has to confirm you've actually put your money in before they release loan funds. For acquisitions, the SBA requires at least 10% equity injection of total project costs.

You can use cash savings, documented gifts, retirement rollovers (ROBS), or seller financing on full standby. If you're using a seller note toward your injection, it can only cover up to half of the requirement, and it has to be on full standby - meaning no payments to the seller until the SBA loan is paid off.

Have your documentation ready: bank statements, wire confirmations, receipts. Incomplete equity documentation is one of the most common hiccups we see at closing.

Settlement Statement (SBA Form 1050)

This shows exactly where every dollar of loan proceeds is going; how much to the seller, closing costs, working capital, whatever else. You and the lender both sign it. Make sure the numbers match what you're expecting.

Standby Agreement

If there's a seller note, you'll sign paperwork documenting that the seller agrees to subordinate their note to the SBA loan.

Pro tip: make sure your seller knows about standby requirements early. Surprises at the closing table aren't fun for anyone.

The Rest

You'll also sign a certification that nothing material has changed since underwriting, and potentially a few other forms depending on your deal. None of it is complicated—just make sure you understand what you're signing.

Insurance Before You Close

You'll need proper coverage in place before closing:

• Hazard insurance on all collateral for loans over $50K, with the lender named as loss payee.
• Flood insurance if anything's in a flood zone.
• Life insurance if you're the key person the business depends on. The lender needs to be named as assignee.

Get this sorted early. Chasing insurance certificates the day before closing is not how you want to spend your time.

Closing Day Tips

Bring your ID. Sounds obvious, but every signer needs valid government-issued identification. An expired license will absolutely hold things up.

Don't rush. You're signing a lot of documents. Take your time. Ask questions if something doesn't look right. Your closing attorney or lender rep should be able to explain anything.

Understand how funding works. Money doesn't release until everything is signed and all conditions are satisfied. Here's the typical flow:

1. Lender confirms your equity is in and documented
2. Funds go through escrow or the title company
3. Loan proceeds wire directly to the seller or escrow - not to you
4. Funding usually happens same-day or next business day

Here's something important: many banks won't release funds until they have the original signed documents back in hand, or at minimum, scans of everything signed. This can create a gap between when you sit down at the closing table and when the money actually moves.

Before closing, make sure you communicate with your lender and the closer at the bank to understand exactly when funding will happen. Some questions to know the answers to:

• Will they fund same-day once they receive scanned documents?
• Do they need originals overnighted first? Is there a wire cutoff time you need to hit?

These details matter, especially if the seller is expecting funds by a certain date or if there are other time-sensitive pieces of the transaction. Get clarity on this ahead of time so there are no surprises.

Once funded, the SBA guaranty is active and the loan is officially in place. You own a business.

After Closing

Get organized. Keep digital and physical copies of everything; promissory note, guarantees, security agreement, settlement statement, insurance policies. You'll need these for taxes, future financing, and random questions that come up over the years.

Handle the transitions. Insurance, licenses, utilities, vendor accounts - get everything transferred into the new entity's name right away. Don't let the administrative stuff slip while you're excited about finally owning the business.

Set up your loan payments. Do this immediately. Most SBA loans require ACH payments. Know when your first payment is due and make sure funds are there. A missed payment in month one is not the way to start this relationship.

Know what your lender expects going forward. Most will want annual financial statements, tax returns, and proof that you're keeping insurance current. Stay on top of it. If something changes materially in your business, keep them in the loop.

Build the relationship. Your lender isn't a one-and-done transaction. If you ever need additional capital, a line of credit, or help working through a rough patch, having a good relationship matters. Don't go dark on them.

Finally: Celebrate

You just bought a business. Most people never even try this, and you actually did it. Take a minute to enjoy the moment with the people who helped you get here.

Then get to work. Closing day was the finish line for the acquisition. It's the starting line for everything that comes next.

Congratulations, and welcome to ownership.

Ready to get working on your deal? Get in touch with us at one of the links below so we can get started working on your deal.

For pre-LOI buyers ready to explore opportunities: Schedule a meet & greet call​

Already have a deal under LOI and need financing help: Schedule an LOI consultation​

Matthias Smith​
Pioneer Capital Advisory LLC

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Disclaimer: The information in this newsletter is for informational purposes only and should not be considered legal or financial advice. Business buyers are encouraged to consult with their legal counsel and accountant to ensure the proper structuring of their transactions and to fully understand the tax implications of seller financing.

Thanks for reading! Feel free to reply directly to this email with any questions or thoughts.