SBA Loans
The government will lend you 90% of the money to buy a cash-flowing business, at interest rates lower than a car loan. Most people don’t know this exists.
What They Are
An SBA loan — backed by the Small Business Administration — is a government-guaranteed loan designed to help people buy or start small businesses. The key detail that MFM has hammered on repeatedly: you can use them to buy existing internet businesses and brick-and-mortar companies alike. The down payment is as low as 10%.
As ramon-van-meer explained on the podcast when walking through his playbook for buying online businesses: “You can borrow up to 90% — so technically you can buy something listed at $400,000 and only put down $40,000. The interest rate is pretty low, anywhere between 5 and 7%, so it’s higher than a mortgage but much lower than a traditional business loan.”
The Math That Makes It Work
shaan-puri ran a live loan calculator on air to illustrate the mechanics:
“You put down $40K. You’re going to take the other $360K as an SBA loan at 6% for 10 years. Your monthly payment on that loan is going to be about $4,000. This business makes $20,000 a month in profit. You take the $20,000, pay back your loan for $4,000, you’re left with $16,000 of profit every month right now. You could buy this today and be making money. And you only put down $40,000, so it only takes two and a half months for you to get all your equity back.”
The leverage math is extraordinary. On a 10-year loan, you control an asset generating substantial cash flow while having risked only a fraction of the purchase price.
How Underwriters Think
A common misconception: people assume SBA lenders primarily scrutinize the borrower’s personal finances. That’s partially true, but Shaan points out the more important factor: “The beauty of SBA loans is they look at your personal credit history, but they really make their decision based on the business. They won’t fund you if there’s too high of a risk. They really analyze whether the business can pay the interest month over month.”
This shifts the underwriting frame from “can you personally afford this?” to “can this business sustain the debt?” — which is the right question.
Brent Beshore’s Origin Story
brent-beshore, founder of permanent-equity, accidentally bought his first business at age 24 using an SBA loan. He had almost no cash. His solution: “What I did was I leveraged the accounts receivable from the existing business as the down payment, then got the rest of the debt through the SBA. So I put very little cash into the deal.” He needed the loan processed in 60 days — nearly impossible — but pushed his contact at the lending institution to make it happen anyway. That million-dollar acquisition became the “Golden Goose” that funded everything that followed.
The Sarah Moore Example
Shaan used a real-world case to make acquisition entrepreneurship concrete: Sarah Moore, who graduated from college and wanted to buy a business rather than start one. She searched locally for businesses already generating about a million dollars in profit annually. Using an SBA loan plus some seller-financing, she bought an egg carton business — “the styrofoam containers for eggs” — with zero of her own cash. That business does millions in profit annually.
The lesson: SBA loans make it possible to skip the startup phase entirely. You’re not betting on whether a business will work. It already works.
The Return on Equity
Ramon Van Meer cited a case from Joe Valley at Quiet Light Brokerage: “There was a woman who bought a business for $1.25 million with an SBA loan two years ago and just closed and sold the same business for $5.5 million. She only put 10% down, so she didn’t even put $200K down, and her return was around $4 million. If done right, SBA loans are a really great leverage tool to get into internet businesses.”
The compounding advantage of leverage: you benefit from 100% of the upside while having put down 10% of the capital.
Due Diligence Before Borrowing
Ramon’s caution: marketplace platforms like Flippa allow anyone to list a business and “claim whatever they want.” Using a vetted broker like Quiet Light reduces this risk — they pre-screen listings. For additional protection, firms like Centurica (centurica.com) will independently verify traffic, revenue, and business claims for a few hundred dollars. They can come back with a different valuation: “We looked at all the data. You were going to buy it for $1.2M but we think it’s actually worth $900K — here’s why.”
The SBA loan is a tool. The due diligence is what determines whether you’re buying a cash-flow machine or a liability.
See also: acquisition-entrepreneurship, seller-financing, boring-businesses, brent-beshore, permanent-equity, codie-sanchez