Advice on Structuring SBA Financing for Business & Leasehold Acquisition

February 20, 2025
by a searcher from University of California, San Diego in Honolulu, HI, USA
I’m evaluating an acquisition and would appreciate insights on how best to structure and finance the deal.
Deal Overview: I’m looking to acquire both the business and the leasehold property it operates from.
- Here are the key details:
- - Leasehold Property: Expires in 16 years, generating $10K/month in rent.
- - Business Details:
> Annual SDE: $470,000
> Inventory Value: $2.75MM
- Proposed Down Payment & Financing Approach: - - 1031 Exchange: Using equity from a fully paid-off townhome valued at $800,000.
- -If additional capital is required, I plan to negotiate a 10% seller’s note on standby to satisfy SBA’s equity injection rule.
Key Questions re Leasehold Structuring: - - Any advice on financing a leasehold property with 16 years remaining?
- - Are there workarounds to avoid SBA’s###-###-#### year minimum lease requirement?
I appreciate any insights or experiences from those who have structured similar deals.
from University of Southern California in Los Angeles, CA, USA
from The University of Texas at Austin in Dallas, TX, USA