New SBA Rules

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by a searcher from The University of Chicago - Booth School of Business
in Greenwich, CT, USA

11mos ago

New SBA Rules

Hi all, Can someone explain the rule on the new SBA loan, when you have to much liquidity to qualify for a SBA loan. Let's say I want 500k SBA loan, if you have over X liquidity you don't qualify. What that value of X is? double the amount of the loan? more, less? What qualifies as liquidity? cash, stocks, what else? What doesn't qualify? Home equity? investment in PE, real-estate? what else?

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reply by a lender 11mos ago
from University of Missouri in Denver, CO, USA

This is mostly just for liquid cash & probably stocks. Retirement is not counted nor equity in a home, etc. If you have say $1mm in liquidity and there is a $300k loan amount, it may be difficult. I think in most circumstances this is not a major issue

reply by a lender 11mos ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Unfortunately like many of the SBA rules, there is not a firm final guidance. It is up to the discretion of the lender to determine what makes sense. If you have substantially more liquid assets then the loan amount you are looking for (so say for a $500,000 loan $1 million or more) and those assets are in cash and marketable securities (non-retirement), then you could have an issue. However, if you have another business you need the cash flow, or cash for other reserves and money down, etc., it may be able to be worked around. We would be happy to review any scenario for you and let you know what can be done. This is really going to be more of a factor on larger transactions then smaller ones. Even though you might have $500,000 in liquidity for a $500,000 loan, it is easy to justify that liquidity for reserves for family expenses, working capital, etc. You can reach me here or directly at redacted