How much does it cost to buy a small business?

By Josh Elberg, founder of Palavir · Published · Updated

Palavir is a Michigan data and automation consultancy.

Short answer

You need at least 10% of the total project cost in equity for an SBA 7(a) loan on an existing business, and the total project cost is more than the price.

The middle US listing asks $489,000 and states $166,680 of yearly profit.

Worked example (an illustration with round numbers we chose, not market data)

  • Price: $400,000
  • Stock: $30,000
  • Closing costs: $20,000
  • Working cash you want: $25,000
  • Total project cost: $475,000. 10% is $47,500, not $40,000.

The 10% applies to the total project cost, regardless of the source of funds. Your lender decides what counts, so ask before you plan around a figure.

What do businesses ask, by price band?

  • under $100,000$55,000
  • $100,000 to $250,000$174,000
  • $250,000 to $500,000$350,000
  • $500,000 to $1 million$697,356
  • $1 million to $2 million$1,375,000
  • $2 million to $5 million$2,900,000
  • $5 million and up$8,500,000
Middle asking price in each band, US listings with a clear price and profit, October 2026. 277 US listings state no asking price, so they sit in no band.

  • under $100,000

    Listings
    249
    Middle ask
    $55,000
    Middle yearly profit
    $24,720
    Left after loan, per year
    $17,589
    Clear our rough 1.25 test
    98%

  • $100,000 to $250,000

    Listings
    303
    Middle ask
    $174,000
    Middle yearly profit
    $70,080
    Left after loan, per year
    $46,540
    Clear our rough 1.25 test
    97%

  • $250,000 to $500,000

    Listings
    375
    Middle ask
    $350,000
    Middle yearly profit
    $134,504
    Left after loan, per year
    $82,735
    Clear our rough 1.25 test
    92%

  • $500,000 to $1 million

    Listings
    343
    Middle ask
    $697,356
    Middle yearly profit
    $232,055
    Left after loan, per year
    $137,850
    Clear our rough 1.25 test
    93%

  • $1 million to $2 million

    Listings
    231
    Middle ask
    $1,375,000
    Middle yearly profit
    $398,070
    Left after loan, per year
    $200,735
    Clear our rough 1.25 test
    87%

  • $2 million to $5 million

    Listings
    208
    Middle ask
    $2,900,000
    Middle yearly profit
    $700,000
    Left after loan, per year
    $259,254
    Clear our rough 1.25 test
    75%

  • $5 million and up

    Listings
    100
    Middle ask
    $8,500,000
    Middle yearly profit
    $1,706,648
    Left after loan, per year
    $422,440
    Clear our rough 1.25 test
    57%
Listings counts those with a clear price and profit. 10% of the ask is a floor on the price alone, not the total project cost. Left after loan is the middle of each listing's own result, so it will not equal a subtraction of the two middle values.

Can the seller's note count as my down payment?

Sometimes. Seller debt can count toward the 10% if it is subordinated to the lender and on full standby (you pay nothing on it until the bank loan is paid off), and it can cover no more than half of the 10%. In our listings, 16% of 3,928 US listings mention seller financing, from 9% to 24% across price bands. A mention is not an offer, so ask early. See seller financing.

What is left after the loan?

Take the 949 clean US listings asking $250,000 to under $2 million. The middle one asks $600,000 and states $200,427 of yearly profit. On the assumed loan (90% of the price, 10 years, 10%) the payments are about $87,883 a year, which leaves about $112,544, before tax.

The middle of each listing's own result is a little different from the result for the middle listing: $112,350. Across all 1,809 US listings it is $82,724.

Our rough 1.25 test asks whether seller-stated profit is at least 1.25 times the payments on that assumed loan. 89% of US listings clear it. A lender's test is different: it uses EBITDA (profit before interest, taxes, depreciation and amortization), all debt after the purchase, and requires enough left to pay the owner. The share that clears our test falls from 98% under $100,000 to 57% at $5 million and up, and it falls at every band from $500,000 up, while bigger deals ask more years of profit.

What if I hire a manager?

Seller-reported profit often includes the owner's pay, called SDE (seller's discretionary earnings: profit before paying the owner; see SDE vs EBITDA). If you will hire a manager, take that salary off first. In the same 949 listings, a $60,000 manager (our illustration) cuts the middle amount left from $112,350 to $52,350. 79% stay above zero.

Not sure whether to buy at all? Compare it with starting a business instead.

What costs come on top of the price?

  • Stock and supplies. Sometimes in the price, sometimes added at closing.
  • Closing costs. Legal, lender and filing fees. We have no data on their size, so ask for quotes.
  • Working cash. Money for payroll and bills in the first months.
  • Valuation and review. The lender requires a valuation. For Initial Acquisitions and Business Expansions, a quality-of-earnings review (an accountant's check of the profit) applies when the price is $3 million or more.
  • Someone to run it. If you will not be the operator, a salary comes out of the profit.

What this data cannot tell you

  • These are asking prices, not the prices businesses sold for.
  • Profit is the seller's own figure. It often includes the owner's pay, so someone still has to do that work.
  • It is a snapshot of listings from October 2026, not a survey of all businesses.
  • Loan terms are our assumption (90% borrowed over 10 years at 10%), not a lender quote.
  • The worked example at the top is an illustration, not a market figure.
  • Nothing here is an offer of credit or a forecast of what you will keep.

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Questions people ask

How much does it cost to buy a small business?

In our October 2026 scan, the middle US listing asks $489,000 against $166,680 of yearly profit (1,809 listings with a clear price and profit). The middle ask runs from $55,000 for listings under $100,000 to $8,500,000 at $5 million and up. These are asking prices, not sale prices.

How much cash do I need to buy a business with an SBA loan?

For an Initial Acquisition (buying an existing business as a new owner) the minimum equity injection is 10% of the total project cost, regardless of the source of funds, and it cannot be reduced or eliminated (the SBA rulebook, SOP 50 10 8.1, Appendix 15). The total project cost includes more than the price, such as stock and closing costs. Confirm with a lender or SBA attorney for a specific deal.

Can the seller's note count toward the down payment?

Sometimes. Seller debt can count toward the 10% if it is subordinated to the lender and on full standby (you pay nothing on it until the bank loan is paid off), and it can cover no more than half of the 10%. A lender decides how it applies to your deal.

How much of the price do I borrow?

Our math assumes you borrow 90% of the price over 10 years at 10%. That is our assumption, not a lender quote. On it, the middle of each US listing's own result is $82,724 a year left after loan payments, before tax and before paying anyone to run the business.

What is the average small business sale price?

We do not have sale prices. We have asking prices, and the middle for US listings is $489,000. Broker reports of closed sales are a better source for what buyers paid. Ask a broker for sold comparables in your trade.

Do I need money beyond the price?

Yes. Stock, closing costs and working cash come on top of the price, and the SBA counts them in the total project cost. A lender also requires a valuation, and for Initial Acquisitions and Business Expansions a quality-of-earnings review (an accountant's check of the profit) applies when the price is $3 million or more.

Sources and method

Palavir Deal Scout: businesses-for-sale listings collected in October 2026 from nine marketplaces and brokers. 3,928 US listings, cut by asking-price band on October 28, 2026. 1,809 have a clear price and profit; repeats, ranges, sold listings and near-identical template listings from broker networks are removed. Profit is the seller-stated figure. SBA figures: the SBA rulebook, SOP 50 10 8.1 (issued by SBA Information Notice 5000-880695; effective October 1, 2026), Appendix 15.

General information, not financial, legal or lending advice.