What does buying a business cost beyond the down payment?

What are the costs, item by item?

These are the costs a buyer typically pays on top of the equity injection, with the ranges available as of October 2026.

1. Legal fees. $10,000 to $80,000 in a buyer deal-cost survey, median $28,500. The purchase agreement, disclosure schedules, lease assignment, SBA closing documents and entity setup all sit here.
2. Quality of earnings (QoE). Median $40,000 in the same survey. A lighter "QoE-lite" ran under $10,000. Proposals for SBA deals have ranged from $7,500 to $30,000 or more. For SBA Initial Acquisitions and Business Expansions at a purchase price of $3 million or more, a lender-commissioned QoE is required.
3. Independent business valuation. Required on every SBA change-of-ownership loan. The lender orders it. Fees vary by provider, so ask for the amount in your term sheet.
4. SBA guarantee fee. For FY2026 on loans over 12 months: 2% of the guaranteed portion on loans up to $150,000; 3% from $150,001 to $700,000; 3.5% from $700,001 to $5 million on the guaranteed portion up to $1 million, plus 3.75% above that.
5. Buy-side adviser or broker. Optional. Buy-side brokers charge flat fees or success fees of 2% to 5%. The seller's broker, typically 10% to 12% on Main Street deals under $1 million, is paid by the seller.
6. Working capital. Cash the business needs after closing to run payroll and pay suppliers before customers pay. It counts in total project costs for the SBA injection.
7. Your living costs. Months of personal expenses until the business can pay you a salary. This is personal, so set your own number.
8. Dead-deal costs. Legal and QoE work on a deal that falls apart is not refunded.
9. Appraisal gap. If the independent valuation comes in below the price, SBA rules cap total debt at the appraised value. The difference is paid in buyer cash.

Other costs, such as insurance, license transfers, franchise transfer fees and lender packaging fees, vary too much by deal and industry for a reliable range. Ask for quotes during diligence.

What does that look like on a real deal size? Worked examples

A $4 million deal (the survey median)

1. Total transaction costs at about 2%: 2% x $4,000,000 = $80,000.
2. Legal at the median: $28,500.
3. QoE at the median: $40,000.
4. Everything else in the 2%: $80,000 - $28,500 - $40,000 = $11,500.
5. The SBA guarantee fee and working capital are on top.

A $1 million deal

1. Low case: legal at the $10,000 survey low plus a $7,500 QoE = $17,500, or 1.75% of the price.
2. Higher case: legal at the $28,500 median plus a $30,000 QoE = $58,500, or 5.85% of the price.
3. If you hire a buy-side broker at 2% to 5%: $20,000 to $50,000 more.
4. Guarantee fee: the loan is over $700,000, so the rate is 3.5% of the guaranteed portion. If the guaranteed portion were $750,000, the fee would be $750,000 x 3.5% = $26,250. Your lender will give the exact figure.

Legal work and diligence do not shrink in proportion to the price. A buyer of a $1 million business should budget a higher percentage than the 2% headline.

Which costs can be financed, and which need cash?

As of October 2026, the SBA counts fees and closing costs inside total project costs. So the loan can cover most of them, and your 10% injection rises with them. Adding $58,500 of costs to a $1 million price raises the minimum injection by $5,850.

Some costs are paid in cash before the loan exists. QoE retainers, legal work during diligence and lender deposits typically come due before closing. If the deal dies, that money is gone. Keep a separate budget for it.

If you are buying your first business

• Spend on diligence in order of cheapest deal-killer first. Bank statements and tax returns cost little to review. A QoE is worth it once the basics hold.
• Do not skip the QoE on a deal below $3 million just because the SBA does not require it. A QoE-lite under $10,000 can catch the problems that matter.
• Keep living money outside the deal. Lenders review liquidity, and so does your household.

If you plan to buy more than one business

Several costs repeat on every deal: legal, QoE, valuation, guarantee fees. Others fall with repetition, because your entity documents, lender relationships and diligence templates carry forward. A buyer planning several acquisitions should set up books, reporting and entity structure on deal one that deal two can reuse. See What should you build in year one if you plan to buy more businesses?

Where these numbers come from: Legal, QoE and total cost figures are from a buyer deal-cost survey (median deal about $4 million). SBA QoE proposal ranges are from Searchfunder. SBA valuation, QoE and project-cost rules are from SBA SOP 50 10 8.1 as summarized by Beancount. Guarantee fees are from NerdWallet. Broker fees are from Investors Club and BizBuySell. Confirm current terms with an SBA lender. SOP 50 10 8.1 applies to loans that receive an SBA loan number on or after October 1, 2026 (SBA Information Notice 5000-880695).

Related questions

Who pays the business broker's commission?

The seller pays the seller's broker, typically 10% to 12% on Main Street deals under $1 million. A buyer pays only a broker the buyer hires. See Who pays the business broker when you buy a business?

Is the SBA guarantee fee paid in cash?

It is a closing cost, and as of October 2026 closing costs count in total project costs. Your lender will show how it is paid in your term sheet.

Do I need a QoE on a small deal?

The SBA requires one only at a purchase price of $3 million or more. Below that, a QoE-lite under $10,000 is a cheaper middle path. See Do you need a quality of earnings report to buy a small business?

What comes next

With the costs mapped, check the rules that set the loan itself: What are the SBA 7(a) rules for buying a business, as of October 2026? The buyers who end up with the most valuable companies decide what the business goes into before they buy it, so the setup costs are paid once.

Related articles

• How much cash do I need to buy a business?
• How do you finance buying a business?
• What do lawyers and accountants cost when you buy a business?
• Do you need a quality of earnings report to buy a small business?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.