Other loans alongside SBA

by a searcher from The University of Chicago - Booth School of Business

3 years ago

Does an SBA loan preclude other secured debt from being taken on either together with or after closing? I'm looking at a deal that would be financed with an SBA loan but I would need to get a heavy duty pickup truck pretty much immediately. I'm wondering if having an SBA loan for ~90% of the purchase price would prevent me from getting a business or commercial auto loan. Thanks in advance for any insight.

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lender from University of Missouri - Columbia

you shouldn't have an issue getting a truck loan post close. The person financing that would have specific lien filed against the title. There could be a covenant against capex but something like that would likely be below the threshold. The issue most people have post close is working capital. I would recommend doing an Express line (or a conventional line) at close with the same lender you do the SBA loan with. Even if you don't need the line at close you should get one in place so that you can have the working capital assets allocated to first position on the line. Then if you need the line increased later you are already set up properly.

3 years ago | like reply | 0 likes

lender from The University of Chicago - Booth School of Business

Similar to Brad's comments, an SBA term loan combined at closing with an asset based lender's working capital facility against AR and INV is not an uncommon structure. The two lenders would have crossing second liens against the primary collateral of the other. A "bucket" for PMSIs by third party lenders are usually permissible at any time.

3 years ago | like reply | 0 likes

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