Seller Consulting Limits in the SBA SOP 50 10 8.1 Update
The SBA's SOP 50 10 8.1, which took effect on October 1, 2026 and replaced SOP 50 10 8, lets a seller stay with a business after a change of ownership for up to 24 months in total, including any extensions. The previous limit was 12 months, so the update doubles the time a buyer can keep the seller involved while still financing the purchase through the SBA. For businesses built on personal relationships, including assisted living homes and adult day centers, that added year can decide whether the census survives the transition.
The limit matters because an initial acquisition financed by the SBA requires the seller to leave ownership entirely, which makes a transition agreement the only way to keep the seller's knowledge in the building. The 24 months is a ceiling measured in aggregate, so a six-month agreement extended three times reaches the limit just as a single two-year agreement would.
Care businesses often need the seller longest, because referral sources such as hospital discharge planners, case managers and local physicians frequently send residents or participants because of the seller personally, and staff who have worked for the same owner for years may follow that owner's lead about whether to stay. A seller who introduces you to those relationships over a year or two can protect revenue far better than one who disappears at closing.
Licensing transitions add another reason for overlap, because many states make a buyer operate under a temporary license or a provisional period before full approval. In Texas, a buyer of an assisted living facility or adult day center works under a temporary license that can last 90 days or longer before the state issues a full license, and a seller who stays through that period can help answer the questions inspectors raise about how the business was run.
Payments to the seller under a transition agreement will generally be treated as a cost of running the business after closing, and lenders will weigh them against the debt service coverage test, which the update raised to 1.25 on historical cash flow for initial acquisitions. A generous consulting fee can therefore reduce the loan the business can support, and some lenders look closely at agreements that pay the seller more than the work appears to justify, since those payments can resemble a hidden addition to the purchase price.
Owner buyouts follow different rules under the update, since outside investors who do not already work in the business cannot take a majority or become the largest owner, and a selling owner who keeps a small stake has generally had to personally guarantee the loan for at least two years after the final disbursement, so the consulting limit is less central to those deals than to a first-time buyer's purchase.
Control is the other issue to settle in writing, because a seller who stays involved for two years can easily keep making decisions out of habit, and a buyer who wants to be running the business from the day of closing is better served by an agreement that describes the seller's duties as advice and introductions rather than management.
Before you close, decide how long you actually need the seller and what you need from them, whether that is referral introductions, staff continuity, help with the licensing transition or training on billing and Medicaid contracts. Put the scope, hours, pay and end date in a written agreement, keep any non-compete in its own document, and confirm with your lender how the payments will affect your coverage. Then plan to use the time, because the 24 months is a limit rather than a guarantee that the seller will stay engaged.
Using that time well starts with a transition plan that ties the seller's role to the parts of the business most at risk, such as referral sources, key staff and billing. I help business buyers build projections that account for the seller's pay, the length of the transition and the revenue at risk if relationships do not carry over. If you are negotiating a seller transition on an SBA deal, send the terms to amer@awadcapitaladvisors.com, and I can help you see how the arrangement affects the deal before you sign.