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Your SBA deal can go past $5 million
One SBA lender put its 7(a) pari passu range at about $9 to $10 million
Shaun Tiwari
October 29, 2026 • Estimated Reading Time: 3 minutes
A buyer finds a business that needs $8 to $10 million of acquisition debt. Someone tells them SBA tops out at $5 million, so they cross SBA off the list and start pricing conventional loans.
That is often where the deal gets more expensive than it had to be.
Last week I asked an SBA lender a simple question: what is your maximum on a 7(a) plus pari passu deal? The answer: "We really don't have a max per-se, but I would say it is around the $9-10mm total range."
Below: how that range works, what this lender said moves it, and the questions to ask before you take SBA off the table.
Where the $5 million number comes from
The $5 million is the maximum size of an SBA 7(a) loan, and the SBA guaranty covers that 7(a) loan only. It also counts the SBA 7(a) balances the borrower already has outstanding, so a buyer with an existing 7(a) has less room.
The cap applies to that one loan. In the same transaction, a bank can make a 7(a) loan of up to $5 million and its own conventional loan alongside it.
That structure has a name, and many buyers are not familiar with it.
How a 7(a) plus pari passu deal works
"Pari passu" means on equal footing. In this structure:
Loan 1 is the SBA 7(a), up to $5 million, with SBA terms and the SBA guaranty
Loan 2 is a conventional loan from the same bank, on the bank's own credit terms
The two loans rank equally against the collateral
It usually closes as one transaction, with one lender on the other side of the table
For the buyer, the result is a single financing package that can run well past $5 million, with a large share of it on SBA terms. As an illustration, a $9 million package could be a $5 million 7(a) and a $4 million conventional loan from the same bank.
What one lender told me
The quote above came from an SBA business development officer at a bank, in an email exchange about an acquisition needing up to about $10 million of senior debt.
The buyer on that deal had asked for conventional debt. The lender's reply was that it would rather put SBA in the structure: it would "utilize the $5mm limit from the SBA note, and then piggyback it with a pari-passu conventional loan."
So I asked for its range. About $9 to $10 million total, with one condition attached: "It really depends on the strength of the transaction."
That is one lender's answer. Some SBA lenders do not do pari passu at all. Others will go further on the right deal. The only way to know where a lender sits is to ask.
What "strength of the transaction" usually means
When a lender says its range depends on the deal, these are the factors lenders typically weigh:
Cash flow coverage. How comfortably the business's cash flow covers payments on both loans combined
Equity injection. How much of the purchase price the buyer and their investors are putting in
Buyer experience. Whether the buyer has run a business like this one, or brings someone who has
Collateral. What the bank can take a lien on, since the conventional piece has no SBA guaranty behind it
Personal guarantee strength. The net worth and liquidity of the owners guaranteeing the loans
A deal that is strong on all five is the deal that gets a lender to the top of its range.
Questions to ask every SBA lender before you rule SBA out
Ask these early, before you build your capital structure around the assumption that SBA stops at $5 million:
1. Do you do pari passu deals alongside a 7(a)?
2. What is the most total debt you would consider on one acquisition?
3. What terms would apply to the conventional piece: rate, amortization and collateral?
4. What would move you to the top of your range on this deal?
5. Would you want SBA in the structure even if we asked for conventional debt?
Two lenders can give you very different answers to the same five questions. That spread is the information you need.
When pari passu is not a fit
A 7(a) plus pari passu deal is one way past the $5 million line. There are others:
Real estate in the deal. A 7(a) plus an SBA 504 loan for the real estate. The SBA decoupled the 7(a) and 504 limits in July, so a borrower can now carry up to $5 million in each when the 7(a) comes first
Seller financing. A seller note can fill part of the gap above the 7(a)
Non-SBA debt. For larger deals, lower middle market lenders such as private credit funds and SBICs can finance the entire debt piece
Which one fits depends on the business, the assets and how much equity the buyer has. We run deals across hundreds of lenders and capture each one's appetite, including how far it stretches on combined structures, so we know which lenders to ask.
The Bottom Line
The $5 million figure limits one SBA loan. The total debt on your deal can run well past it.
Before you move a $6 to $10 million acquisition off SBA, ask each SBA lender for its combined range and what it would take to get there. One lender's answer was about $9 to $10 million. Yours may be different, and you will not know until you ask.
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