
Subordinated Debt in SBA-Backed Acquisitions
Subordinated debt in SBA-backed acquisitions is the “middle layer” of the capital stack—sitting behind the SBA senior loan but ahead of equity—to fill the gap when SBA proceeds and buyer cash don’t fully cover the purchase price. It often takes the form of seller notes or mezzanine loans and must be structured carefully under SBA rules (especially around full-standby vs. current-pay terms) so it doesn’t blow up DSCR or equity injection requirements. When designed correctly, subordinated debt lets buyers close more deals without over-levering the business or giving away additional equity.











