SBA Loan Down Payment: How I Bought a $1M+ Business for 5% Down (And A Warning)

Note: The financial figures in this post are approximations for illustrative purposes due to seller confidentiality agreements. While the deal structure and percentages are accurate, the specific dollar amounts have been adjusted but remain in the general range of the actual transaction.

Doug here, new owner of Shoeboxed. I bought Shoeboxed in 2025 after a long run of hired-gun CEO gigs. I wanted to own my own thing, and help people I really admire - entrepreneurs and small business owners who work their butts off and deserve to keep more money in their pockets and out of the tax man's.

As I told people the news, one of the most common questions I got was: "How'd you actually buy Shoeboxed? How much did you have to put down?"

And honestly? The SBA loan down payment structure isn't that complicated. But buying a business this way is also not something most people should try.

Let me tell you the story.

Walking Away from a Great Job

A few months ago I walked away from a really good CEO gig. Like, objectively great. Mid-eight figures in revenue, awesome team, important mission (helping people hear better), solid CEO comp. The kind of job where your friends ask, "why would you ever leave that?"

Especially when I told them where I was going.

I left to buy a 10-person software company that's been mostly ignored for the last few years, had shrinking revenue, and needed a ton of work.

You want to know the crazy part?

I used an SBA loan to do it and only had to put 5% down.

That's it.

Here's how the SBA loan down payment actually worked, and more importantly, why it's probably a terrible idea for you.

How The SBA Loan Down Payment Actually Works

The numbers I'm about to share have been adjusted for confidentiality reasons, but they're in the range of the actual deal. For the sake of illustration, let's call it $1.5 million total project cost. That includes the purchase price plus a chunk of working capital so I wasn't scrambling for cash on day one.

The SBA loan covered 80% of the total. That's the part everyone focuses on. "Wow, the bank gave you a million dollars!"

Yeah. :)

But... if I screw this up, they can take my house. More on that in a minute.

So if the SBA is covering 80%, I need to come up with 20%, right? That'd be ~$300K, which I don't normally keep under my pillow.

Here's where the SBA loan down payment structure gets interesting.

The SBA lets you use seller financing to cover half of that 20%. So the seller agreed to carry a note for 10%. And here's the kicker: if the seller agrees to split that into two pieces with one half held back, the held back part counts for buyer equity too.

So half of the seller loan started right away. The other half is on standby for two years. Meaning I don't have to pay it for 24 months, but it still counts toward my equity contribution.

Did you catch that part?

The seller standby loan counts for MY equity as well, so instead of needing to put 10% down, I only need to put 5% down.

So instead of needing 20% ($300K), the seller financing knocked my bit down to 10% ($150K), and then structuring half of the seller loan as standby knocked that in half again to 5% ($75K).

Crazy huh?

The SBA Loan Down Payment Breakdown

Here's how the deal structure breaks down (again, adjusted for confidentiality but in the range):

That's how you buy a company with just a 5% down payment using an SBA loan.

The seller gets their money, the SBA gets their loan, and I get to own a business without having $300K waiting in my checking account.

Pretty cool, right?

It is. Until you think about what happens if it doesn't work.

SBA Loans Are Personally Guaranteed

Let's start with the most important thing: SBA loans are personally guaranteed.

That means if this thing goes sideways and I screw it up somehow, the bank doesn't just take the business - they can take my house too.

That thought takes your breath away.

Most people don't want to live with that hanging over their heads. And honestly? Most people shouldn't.

I'm weirdly comfortable with it. Maybe that makes me crazy. But I've been doing this kind of thing for 15 years now, and I've learned that if you're going to take big swings, you'd better be okay with the possibility of missing.

Let me explain - this is my fifth time as a CEO. Before Shoeboxed, I ran:

• MDHearing (the hearing aid company) for 6 years

• Scripted (content marketplace) for ~2 years

• EarthClassMail (mail scanning) for ~2 years

• HomeFinder (real estate portal) for ~5 years

I got brought in as a hired gun each time. Some of those were turnarounds. Some were parachute drops where I showed up and had to figure out what was on fire. A couple of them worked out great. A couple... didn't.

But here's the thing: I learned all those hard lessons on someone else's dime. I got to practice being a CEO without risking my own money.

That's a huge advantage.

If you've never done this before—if you've never walked into a company, looked at the P&L, and gone "oh crap, we have six weeks of runway"—then buying a business with a personally guaranteed SBA loan down payment is probably not where you want to start.

I Do This For Fun (Probably Not Normal)

Here's the other thing people don't realize: I actually think this stuff is fun.

Like, genuinely fun. Like, "this is what I like to do on my off days" fun.

I've started a bunch of ridiculous companies over the years.

PickleOfTheMonth.com (yes, really). FindHorseForSale.net (I cranked it out in a weekend on a bet with my devs at HomeFinder). AccentTraining.net (technically cool, terrible business idea).

There were more. Most of them failed. A few I sold for a couple thousand bucks on Flippa just to get rid of them.

I've also bought a handful of companies—some personally, some through my CEO roles. OpenHomePro. MovingCompanyReviews, and the predecessor to CallTutor.com. I've done diligence on well over 50 other deals, and looked at thousands of listings on Acquire.com, Flippa, EmpireFlippers, and BizBuySell.

Every single one was unique and challenging in its own special way.

My idea of a good Saturday is building a landing page to see if random strangers on the internet will click "Buy Now." If you don't find that energizing, this probably isn't for you.

Why Shoeboxed?

Most of the deals you see on Flippa or BizBuySell or Acquire? They require near perfect execution just to break even. One bad hire, one algorithm change, one competitor showing up, and you're toast.

I didn't want that. I wanted something where I could fumble around a bit and still make it work.

But honestly? That's not why I picked Shoeboxed.

Here's the thing: big companies get to hire $500-an-hour accountants and tax attorneys to find every single deduction, every loophole, every way to keep more of their money. They've got teams of people whose whole job is to make sure the company pays as little in taxes as legally possible.

Small business owners? Freelancers? Solo entrepreneurs?

They're lucky if they get an hour with their CPA once a year. And most of them are leaving thousands of dollars on the table because tracking receipts and mileage is just... annoying. It's tedious. It's easy to forget.

So they end up paying more than they should, and that money goes to the IRS instead of back into their business or their family.

That drives me crazy.

I love helping the little guy. Always have. There's something deeply satisfying about building something that helps someone who's working their butt off keep more of their hard-earned money. A plumber in Ohio. A freelance designer in Peoria. A contractor in Milwaukee. Real people doing real work.

Why shouldn't they have access to the same kind of tax-saving magic that the big guys get? Why can't we make it so simple and dead easy that it just... works? That it feels magical?

That's what Shoeboxed does. Or at least, that's what it should & will do. And that's what I can't wait to spend the next few years building.

Shoeboxed's been around for nearly 20 years. It's got real customers who pay real money every month. The tech is old and clunky, but it works. There's enough margin for error that I won't sink the ship in the first 90 days. And the mission? The mission is solid.

Like, "hell yeah!" solid.

Help people save money on taxes. Make it simple. Make it magical.

Help the little guy win.

That's a mission I can get behind. That's a business worth fighting for.

Most businesses don't give you that luxury.

The First Few Months

The first few weeks have been... intense!

There's no onboarding. No training manual. No one sitting you down to explain how things work. It's just you, a laptop, and a Basecamp project full of people waiting for you to make decisions.

Throw in some visits to a team asking themselves, "Who's this new owner guy? Does he know what he's doing? Will he treat us well? Will we have jobs next year? Why the heck is he good at axe throwing?", and it makes for one heck of a first few weeks.

You're figuring out the tech stack, the vendors, the customers, the team, the financials—all at once. And every day you're making big decisions without nearly the information or knowledge you wish you had.

Should we rebuild the app? Should we fire this vendor? Should we raise prices? Should we focus on tech or marketing first?

Should I just go take a nap and ignore everything to see if it'll magically solve itself (it never does)?

To be honest with you, most days I don't know. I take a good guess and I act.

Action beats almost anything because it provides learning.

If you need certainty to sleep at night, this is not the game you want to play.

Ownership Can Be Lonely

And here's the part no one mentions about buying a small company: it can be lonely.

When you're a W2 CEO, you've got a board. You've got investors. You've got people who care (or at least they pretend to). There's someone to call when things go wrong.

If you're a W2 employee, you've got your fellow employees.

When you own the company? It's just you. And maybe your dog to listen to you and give you advice. :)

No one's coming to save you. No one's going to tell you it's going to be okay. You either figure it out or you don't.

So why did I do it?

Honestly? Because I've wanted to own my own business since I was five years old. I had big plans as a kindergartner to open a combination bowling alley and pizza restaurant. (Very Wisconsin, I know.)

I loved being a CEO for other people. I loved the work. But I was always building for someone else. Someone else got the upside. Someone else made the big calls.

Now? This is mine. If we win, I win and my team wins. That's worth the risk.

Use Experts To Help You

One more thing before I wrap this up and stop boring you.

I couldn't have pulled this off without Matthias Smith, Val and the team at Pioneer Capital Advisory. They walked me through the whole SBA process, found me lenders, and guided me every step of the way through closing to make sure I didn't screw anything up.

If you're seriously thinking about doing something like this, talk to them (or another expert) first.

I'll use them again when/if we're ready to grow through acquisitions, assuming I don't screw this up first (a non-zero possibility).

Seriously, you need an expert here. Get their advice early.

So that's the story. I bought a software company with a 5% SBA loan down payment, and it's been equal parts terrifying and exhilarating.

A Final Thought on Buying A Company With a SBA Loan

If you're thinking about doing something similar, just make sure you know what you're getting into. Make sure you're okay losing everything (it happens every day unfortunately). Make sure you've done this kind of thing before, know the financial scenarios inside and out, and know what worst case scenarios you can withstand.

Pretty much anything that can go wrong will.

If you get that far, then ask yourself honestly, "do I LOVE doing this stuff?"

If you check all those boxes? Sleep on it. It's a lot to risk, and there's no shame in deciding it's not for you.

If after all of that you still want to do it, then go for it.

If not? No harm done, the responsible call is likely staying where you are.

Anyway, that's my story.

Thanks for following along.

- Doug

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