EIDL loan and a good deal

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by a searcher from Pepperdine University - Graziadio School of Business and Management
in Denver, CO, USA

9mos ago

EIDL loan and a good deal

I have a deal under LOI, and like every deal, it’s unique. There’s an opportunity to assume an existing EIDL loan: $500k at 3.75% over 30 years, with a personal guarantee. (the 500k would be paid to the seller.) If I can assume it, this would significantly reduce my SBA 7a needs to around $300k (assuming I go SBA vs. investor capital). My research suggests it’s possible to assume the EIDL loan, though it sounds like a grind with lots of red tape. Has anyone here successfully assumed an EIDL loan in an acquisition? Any lessons learned or pitfalls I should be aware of?

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reply by a searcher 9mos ago
from Sophia University in The Woodlands, TX, USA

One more note as I think through this... SBA7a may have a stipulation where they require you to pay off the EIDL by wrapping it into the 7a. If that was the case, assuming the EIDL and going the investor route would prob be a cheaper path

reply by an intermediary 9mos ago
from Harvard University in Dallas, TX, USA

We assumed an EIDL in February 2025 when acquiring a company. The SBA was in chaos at the time due to DOGE cuts but we managed to get it done. SBA wants a partial paydown of the EIDL. We negotiated them down to a single digit percentage but I understand from others that they have toughened up their stance on this. They would not subordinate to any other debt however, which caused some issues as we were going to have a bank term loan as well. They wanted us to pay down the EIDL in an amount equal to 50% of the term loan, which would have left a hole in the cap stack. It is worth trying.