Closing before SBA funding

searcher profile

October 11, 2023

by a searcher in Illinois, USA

Hello all,

Can you close and change the ownership of business before funding happens ? Bank is going to take another 3 weeks before they can fund it. But Seller wants to close on first of month to keep the books clean.

What things needs to be true in order to Close / change the ownership of prior to bank funding.

this is an asset purchase .

thanks in advance.

0
5
117
Replies
5
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
In theory you could close the business in escrow and complete the transfer once the financing is in place. But this is high risk to both sides if something falls apart of the financing. If you got some sort of other financing you could close and see if you could refinance into the SBA loan, but only if the financing was provided by someone other than the seller. There is a two year waiting period before you can refinance seller debt into an SBA loan.

I would recommend talking to your existing lender and finding out what options might exist and what they might allow. That is going to be key for you.
commentor profile
Reply by a searcher
from Southwestern University in Houston, TX, USA
The SBA isn't really big on "last minute changes". Or "changes". If you're going to close prior to bank funding, you'll need the owner to accept delayed payment. And you need to accept the risk that the bank will change their mind - a "feature" of 2023.

If the seller wants to close on the 1st of the month and it's going to take 3 weeks for the bank, close the 1st of the following month. There's probably more going on here than meets the eye.
commentor profile
+3 more replies.
Join the discussion