Equity requirement - business + real estate

profile

May 06, 2026

by a searcher in Nashville, TN, USA

I'm looking at buying a business and its underlying real estate. My plan for the equity injection requirement was to bring 5% cash to the table and have the seller carry a 5% note on full standby for the life of the loan. However, I had a lender tell me that this isn't possible when a business and real estate are combined in the same loan, which is news to me. Can anyone else opine on this?
0
8
154
Replies
8
commentor profile
Reply by a lender
from University of Southern California in Los Angeles, California, USA
@redacted‌ - Brian, that lender gave you the wrong answer. The SBA does allow a seller note on full standby to count toward your equity injection on deals that include both the business and real estate, as long as the actual cash equity injection is 5% and you have a seller note for 5% on full standby. "Full standby" means zero payments for the entire life of the SBA loan (typically 25 years when real estate is included, not 10). That's a long time for a seller to wait, and many sellers won't agree to it. Some lenders also layer on their own requirements above the SBA minimums, which is likely what happened here. A few things to think about: if you structure the real estate on a 25-year term (which is standard when RE is 51%+ of the project), the seller note standby period extends to match. We work with 50+ SBA lenders and fund projects with 5% equity and 5% seller notes all the time. are a 100% free service to you the borrower. We We can find you a lender that can fund your deal too. Happy to talk through your specific deal structure: redacted or https://cal.com/team/sba/searchfunder.
commentor profile
Reply by an intermediary
from New York University in Chicago, Illinois, United States
@redacted‌ We should connect on the real estate which could also provide some capital for the acquisition. I'm at redacted
commentor profile
+6 more replies.
Join the discussion