SBA Loans for Accounting Firms

SBA accounting firm loans by the numbers

From FY2015 through June 30, 2026, the SBA approved 3,637 loans to CPA offices under 7(a) and 414 under 504, net of cancellations.^[1] In this profession, owners usually purchase a firm rather than start one.

So many 10-year terms point to purchases of clients and goodwill, with the office leased: a change-of-ownership loan can't amortize over more than 10 years unless real estate is in the deal. The charge-off rates belong together. Smaller CPA loans did better than average, and large ones did worse.

Three ways into a firm

• Purchasing a firm as a first-time owner is an Initial Acquisition. At least 10% down that can't be waived, and the seller's history must show 1.25 coverage.^[2]
• Purchasing your partner's share, after 24 consecutive months or more in the business, so that you end with 100%, is an Owner Buyout. Same 1.25 floor, different equity rules.
• Adding a second firm can qualify as a Business Expansion at a 1.15 floor if your firm purchases 100% of the other firm's ownership interest and both sit in industry group 5412, which covers CPA offices, tax preparation, payroll and bookkeeping.

The size limit for CPA offices is $26.5 million in average annual receipts, counted together with any firm you purchase.^[3] In the 2022 Economic Census, 77.5% of CPA firms that operated all year took in under $1 million, and 63.6% had fewer than 5 employees. The four largest firms took 47.7% of the industry's receipts, so an industry average describes almost nobody you would purchase from.^[4]

Who may own the firm is state law

The SBA's rule is one line: a business that needs professional licenses is eligible as long as its ownership structure meets your state's requirements, and the lender documents that in the loan file. Your state board of accountancy decides who may own a CPA firm, whether a non-CPA may hold any share, what firm permit the firm needs and how peer review applies. The SOP doesn't say what any state requires. Every owner and SBA-required guarantor must also be a U.S. citizen or national whose principal residence is in the U.S.

A state CPA firm permit is a license to practice, generally not transferable, so it isn't conveyed in the sale and isn't SBA collateral. If the target does reviews or audits, get the permit and peer review answers from your state board in writing before you sign.

The client list is the asset, and the debt is capped at the valuation

In the book's main example, Rebecca Thornton, a CPA and senior manager at a regional firm for eight years, purchases a retiring sole practitioner's firm for $780,000. Her new single-member PLLC purchases the assets: client relationships, the client list, a non-compete, and $60,000 of furniture and computers. The firm has 6 staff, a leased office and $940,000 of receipts, and it does tax returns, bookkeeping and compilations, like most small firms.

• Clients can be financed. A change-of-ownership loan may pay for goodwill, client lists and agreements not to compete, over no more than 10 years.
• The lender orders the valuation. Above a $350,000 Business Purchase Price, or whenever buyer and seller have a close relationship, the valuation must come from an independent qualified source and be requested by and prepared for the lender. A CPA with the ABV credential qualifies, but never one working for you or the seller. Rebecca's came in at $800,000.
• Total debt can't exceed it. Debt, including any seller note that isn't on full standby, is limited to the valuation, and any price above it must be equity.
• Only the past counts. The lender tests the seller's last fiscal year or a two-year average, after a market salary for the owner. Projections can't be used to meet the 1.25 floor on a purchase.

Purchasing only a block of clients is a different question. An asset purchase counts as a change of ownership when you purchase all or substantially all of the seller's business and continue its operations. Without that continuity, the lender may treat the deal as a start-up, so describe a client-block purchase to your lender in writing before you set a price.

Furniture and receivables count at 10%. Clients count for nothing.

When the loan isn't fully secured, the lender must take available equity in personal real estate the owner holds alone, though not where the equity is under 25% of its value. Rebecca's home is in her name, worth $480,000 with a $300,000 mortgage, so her lender takes a lien. The SOP sets no credit rate for a personal home. Her lender borrows the 85% limit for business real estate and subtracts the mortgage, which counts the home at $108,000, and her non-owner spouse signs the collateral documents.

Her PLLC has one member, so on a Standard 7(a) loan that isn't fully secured, the SBA requires life insurance in the amount of the shortfall. On her lender's count of the home, that is $637,000, and her lender may ask for more. A shortfall alone is not a reason to decline the loan. Hazard insurance is required on pledged collateral for 7(a) loans over $50,000, which in her case covers the office contents and the home.

Client retention and the seller's transition

In a small firm, clients often hire the person. When the founder leaves, the relationships have to move to someone new, and no reliable public figure says how many will. Two SBA rules shape how you handle that risk.

• A buyer rebate is allowed. An earnout is not. The classic practice deal, where the price rises with the fees collected from retained clients, is an earnout, and the SBA prohibits it. Rebecca's agreement has a fixed price plus a buyer rebate of up to $78,000 if retained-client fees fall short. Any rebate goes to her loan principal, with no recoupment fee, and it stays separate from the working-capital true-up.
• The seller consults, for two tax seasons at most. In an Initial Acquisition or a Business Expansion, the seller may not stay as an officer, director, stockholder or employee, but may consult for up to 24 months in total. That is the window for introduction letters, joint client meetings and the hardest returns.

A holdback of purchase price in escrow to back the rebate is your lender's call. An SBA closing escrow can last no more than 5 business days, so get any retention escrow approved in writing before the letter of intent is final. Keep the non-compete as its own document: it is a purchased asset and should stay in force whether or not the seller ever consults.

Rules that apply because it is a tax practice

• The client list moves only with the practice. A preparer may transfer its taxpayer list only together with the sale of the tax return preparation business, and due diligence on client tax data must run under a written confidentiality agreement.^[5] Sign it before you see any client data.
• The lender pulls the transcripts. The lender verifies the seller's numbers against IRS transcripts, and the SOP doesn't permit the borrower or its own tax preparer or enrolled agent to file Form 8821 for an SBA loan. You prepare returns for a living, and you still can't pull these.
• A paid packager is an Agent. Anyone you pay to prepare your loan application, a fellow accountant included, is an Agent under SBA rules: the fee goes on Form 159, contingency fees aren't allowed, and the fee doesn't count toward your equity.

Down payment and seller notes on a purchase

For a first-time owner, the SBA minimum is 10% of total project cost, and it can't be reduced or waived. A seller note counts toward it only on full standby, meaning no principal or interest for the life of the SBA loan, and limited sources like that can cover no more than half of the required injection. A temporary exception for veterans: from November 11, 2026 through September 30, 2027, the SBA has announced that an eligible veteran purchasing an existing business with a 7(a) loan may raise the full 10% from these sources (SBA News Release 26-117); ask your lender how it applies.

Rebecca needed $85,000. She put in $45,000 of her own cash, and the seller carried $40,000 on full standby, under the half cap of $42,500. Many lenders ask for more than the minimum.

Rebecca's deal, start to finish

Every number below comes from the book's worked example. The interest rate is illustrative.

Purchasing your partner's share

Marcus Bell joined his firm as a staff accountant seven years ago and now owns 30%. The senior partner owns the other 70% and wants to retire, and offers it to him for $980,000. Marcus purchases the 70% directly and ends with 100%. Because he has been in the business at least 24 consecutive months and is purchasing another owner's entire interest, the SBA treats it as an Existing Owner Buyout, and Marcus and the firm are Co-Borrowers.

His seller note is the whole half cap, $49,000. His lender could have reduced or waived the equity if the firm has enough liquidity and no negative net worth at the last fiscal year-end. Waiving it would have barred dedicated working capital in any 7(a) term loan for 90 days, with working capital coming from existing cash or a line of credit instead. Marcus injects it anyway.

The structure decides the category. Bringing in a new owner through a new holding company that owns the firm is not eligible, so Marcus purchases the interest directly. A manager hired 20 months ago trying the same purchase would become the largest owner without the 24 months, so the deal would be held to Initial Acquisition standards. And a partner buyout will likely count as a close relationship, so expect an independent valuation even below $350,000. One question is open: the bar on sellers staying as employees names only Initial Acquisitions and Business Expansions, and no sentence in the SOP settles whether a partner whose entire interest is purchased may stay on staff. Marcus's lender decides, and your partnership agreement's buyout clause has to fit the SBA rules, so put both in front of your attorney.

Adding a second office: the Business Expansion

Linda Chen has run her small-town CPA firm for 18 years, with $2,300,000 of receipts. Her firm purchases 100% of the stock of a tax-preparation and bookkeeping firm in the next town, with $610,000 of receipts, and runs it as a separate subsidiary. Both firms are in group 5412 and her firm has far more than two full fiscal years under its current ownership, so the deal is a Business Expansion at a 1.15 floor. The target keeps its own entity, so the two firms are Co-Borrowers, and Linda remains the one guarantor.

The lender can combine the two firms' cash flow only because the target will operate independently after the purchase. If Linda folded it into her firm, with one set of books and one staff, her lender would likely judge the target on its own: $96,000 against $66,572 of new debt service, or 1.44. Keep the separate-operation plan in the file and follow it.

Her lender could have waived the equity on an expansion. She injects it, because a waiver would have barred the $25,000 of working capital. A 504 loan was a possibility for the condo alone, as a separate loan: a 504 can't be blended with the purchase and can't pay for goodwill. Because the condo is pledged, the SBA's environmental review applies; for a unit in a multi-unit building the lender can skip the prior-use code check, and on a loan over $250,000 the review starts with an Environmental Questionnaire plus a Records Search with Risk Assessment.

Tax season, timing and lines of credit

Employment in CPA offices peaked at 558,044 in February 2024 and bottomed at 525,025 in September.^[6] No government source publishes CPA firm revenue by month, so build your own month-by-month record from the target's books. Work in process and receivables pile up in the busy months, which is one reason Rebecca plans to close outside tax season.

No SBA line of credit can pay for a firm purchase. Once a firm owns the practice, a Seasonal CAPLine may help with tax-season staffing and receivables if the firm can show a definite seasonal pattern, but it can't carry the summer slowdown. Whether unbilled work in process counts as receivables for a lien or a borrowing base is your lender's call. For a cloud practice with no client-facing office, the lender may skip the physical site visit if it documents why.

Which SBA program fits an accounting deal

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