Pioneer Capital Advisory Enters Year 4: Still Closing. Still Winning. This week marks the official start of Pioneer Capital Advisory’s fourth year in business. From year one, we’ve focused on one thing: helping buyers close SBA-financed acquisitions with structural clarity and lender alignment. And even as the rules have changed—we’re still getting deals done.

Last week alone, we closed three SBA-backed transactions, including two involving licensed businesses. Despite tighter scrutiny and revised SOP 50 10 8 guidance, our clients are proving that prepared buyers are still winning. Let’s break down what’s changed, what’s working, and what lenders actually want to see.

The Licensing Game Has Changed - Substantially

As of June 1, 2025, SOP 50 10 8 mandates that any seller retaining equity must personally guarantee the SBA loan for two years - even for a minority stake. This seemingly small change has massive implications.

For years, the conventional workaround in license-sensitive industries - HVAC, pest control, home health, electrical, and beyond - was simple: retain the seller with 5–10% equity post-close to preserve licensure. That option is now technically allowed but functionally dead in most deals.

The reason? Few sellers are willing to provide a two-year personal guaranty on a business they no longer control. According to SOP 50 10 8, “Each 20% or more owner of the EPC or OC must guarantee the loan,” and the same applies when minority equity is retained with operational involvement or license continuity.

This is a sea change - and buyers must adjust.

SBA Still Allows a 90-Day Window - But Lenders Don’t

The updated SOP states that “proof of licensing must be obtained within 90 days of final disbursement.” However, in practice, SBA lenders now demand a full license strategy before they even issue a term sheet.

Five Licensing Structures That Still Work

Here are the five models we’ve used in 2025 to structure license-compliant SBA acquisitions:

1. Buyer or Guarantor Is Licensed

• Simplifies Underwriting
• Favored by banks and typically results in faster term sheet issuance

2. Key Employee as License Holder

• Must sign a two-year employment contract
• Often includes symbolic equity (1%–5%)

3. Symbolic Equity to License Holder

• Avoids triggering 20% PG requirement
• Signals continuity without material risk

4. Seller Retains License + PG

• Viable only when seller is open to a full PG
• Rare but still used in family successions

5. RMO/RME Licensing (State-Specific)

• Legal in states like CA, NV, AZ
• Requires documentation of control and contractual oversight

SBA’s Official Stance on Licensing Continuity

In SOP 50 10 8, the SBA outlines that in a change-of-ownership scenario, “the business must continue uninterrupted and in compliance with all required licensing, permitting, and regulatory requirements at the time of closing”. This explicitly places the burden on the buyer - not the lender or the SBA - to ensure operability on Day One.

This means that informal handshakes, “we’ll figure it out post-close” assumptions, and reliance on post-transaction seller involvement without a guaranty are no longer viable.

HVAC Case Study: Structuring Pre- vs. Post-SOP

Target: $2.8M HVAC Business (Florida)
​Licensing: Required at closing
​Buyer: Financial acquirer
​Seller: Licensed and retiring

2023 Strategy (Pre-SOP 50 10 8):

• Seller retained 10% equity
• Stayed on as license holder
• Buyer committed to obtaining licensure post-close
  ​Result: Approved

2025 Strategy (Post-SOP 50 10 8):

• Seller declined to PG
• Key technician signed two-year employment agreement
• Granted 1% equity and $10K retention bonus
• Buyer enrolled in licensure coursework
  ​Result: Approved

This new model: licensed employee + symbolic equity + buyer contingency plan is fast becoming the new standard.

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What Lenders Actually Want to See

Lenders are demanding more than technical compliance. They want clarity.

Required by Most Lenders Before Underwriting:

• Signed employment contract with the license holder
• Clear backup plan (i.e., buyer pursuing licensure or secondary license holder)
• Documentation proving alignment (symbolic equity, incentive comp, etc.)

New Licensing Trapdoors Hidden in SOP 50 10 8

Beyond seller equity and licensing, SOP 50 10 8 introduces additional structural challenges buyers need to understand:

• Management agreements must show “meaningful oversight” by buyer—or the business may be deemed a passive, ineligible entity.
• If your license holder is not an owner or guarantor, they must have a binding employment agreement with clear job scope and compensation.
• If license continuity depends on a seller, they must meet all SBA guarantor criteria—including financial strength and citizenship requirements.

Real Deals: Three Closings from Last Week

Last week, Pioneer Capital Advisory closed:

• A 100% expansion acquisition of a property management company (licensed property manager retained via employment agreement)
• A gymnastics business acquisition that included the purchase of commercial real estate (buyer licensed by close)
• A large-format printing and graphics installation franchise (licensed technician retained with 3-year contract and equity bonus)

Each of these transactions navigated complex SBA requirements—and passed with clean lender approvals.

Why You Must Structure Before the LOI

SBA SOP 50 10 8 is explicit: lenders must determine “program eligibility… at the time of application and throughout loan closing and disbursement”.

Translation? You can’t back into a license strategy post-LOI anymore.

What to Prepare If You’re Targeting a Licensed Business

If you’re actively searching, here’s what you must line up:

✅ Named license holder (before LOI)

✅ Signed employment agreement

✅ Symbolic equity or incentive comp plan

✅ Contingency plan if license holder exits

✅ Seller PG documentation (if applicable)

NAAGL Conference Insights Coming Next Week

This week, I’m speaking at the Spring 2025 NAAGL Conference in Salt Lake City. We’re getting real-time feedback from SBA policy leaders and top banks. Next week’s edition will include:

• Lender-by-lender interpretations of SOP 50 10 8
• Seller PG enforcement trends
• Updates on legal reviews of symbolic equity vs. passive ownership

Want Expert Help Structuring a Licensed Acquisition? We’ve done this over 80 times—and counting. At Pioneer Capital Advisory, we ensure every deal we underwrite is license-ready, lender-aligned, and structurally compliant.

📅 Book a Call 📧 matthias@pioneercap.com

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Supporting You Beyond the Financing SBA financing is only one piece of a successful acquisition. Behind every deal we close, there’s a broader team that helps buyers move from signed LOI to sustainable operations. At Pioneer Capital Advisory, we collaborate closely with two operator-led firms that we trust to support buyers at key moments in the process.

Pioneer Tribe Insurance Solutions Led by Jelani Fenton Commercial insurance is often one of the most misunderstood—and delayed—components of SBA-financed acquisitions. Jelani Fenton, a longtime collaborator and the founder of Pioneer Tribe Insurance Solutions, leads a team that understands how to navigate lender requirements, policy timing, and risk coverage in the context of real-world acquisitions. His firm works with business buyers to put the right policies in place, coordinate with lenders, and ensure there are no surprises at the closing table.

Their involvement has helped many of our clients meet lender deadlines with confidence and avoid costly last-minute issues.

🌐 www.pioneertribeinsurance.com​

SMB Business Plans Led by Joe Thomas A lender-ready business plan is more than a formality—it’s often the difference between a smooth underwriting process and weeks of delays. Joe Thomas, the operator behind SMB Business Plans, works with acquisition buyers to craft clear, lender-aligned plans that explain the deal structure, operating transition, and borrower qualifications in a way SBA credit teams can digest quickly.

We’ve seen firsthand how Joe’s team helps elevate borrower narratives—especially for first-time buyers navigating their first acquisition.

🌐 www.smbbusinessplans.com​

Thanks for reading,

Matthias Smith

Founder, Pioneer Capital Advisory

Author, The Buyer Advocate

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.