Creative ways you would try to structure a $5m deal (with only $250k down)?

searcher profile

March 01, 2023

by a searcher from St. Petersburg College in Tampa Bay, Florida, USA

What are some creative ways you would try to structure a $5m purchase if you only have say, $250k for a down payment, aside from getting investors to bridge your equity gap?

Ideally while keeping it SBA eligible, If that's even possible within this hypothetical scenario.
Assumptions:
$5m purchase price Inventory included: $500k
FF&E: $1m SDE: $1.5m


Open to either hypothetical answers, or even actual numbers from a deal you may have been involved in that was able to get funded.

Cheers!

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commentor profile
Reply by a searcher
from California State Polytechnic University in Pomona, CA, USA
$4.5M SBA Loan, $250k Seller note on full standadby, $250k of your capital. If the purchase multiple is good, most likely sub 4.0x, then that should be a way forward with a deal.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
It is possible to do an SBA 7A loan with only 5% equity if the seller carries back a note on full standby for the life of the for at least 5% of the purchase price. However, this structure is harder to get done because it means less equity in the deal. Usually we see lenders want to see the seller carry back 10 to 15% of the deal when there is less seller equity. However, the additional money being carried back does not necessarily need to be in a standby note. There can be two sellers notes. One on standby and one in repayment, so long as the cash flow supports the repayment of the second seller note.

The biggest concern most lenders are going to have is what does post closing liquidity look like. We would need to be sure there is enough liquidity in the deal to be sure it survives.

We would love to have a conversation and take a look. We have over 500 unique funding partners we work with including over 50 SBA preferred lenders, so we can bring many options to the table. We are very verse in structuring deals. You can ping me here or reach me directly at redacted Good luck.
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