SBA EQUITY INFUSION QUESTION

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by a searcher from Clemson University
in South Carolina, USA

3yrs ago

SBA EQUITY INFUSION QUESTION

Hello Search Funders, the SBA has been doing several updates recently and I was curious if you all, especially the ones experienced in SBA financing, have any insight to new SBA regulations. The question is, does the SBA itself allow a 10% standby note from the seller during an acquisition thus allowing the buyer to receive an SBA loan without any equity injection or is it completely at the discretion of the banking institution?

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reply by a lender 3yrs ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I did a post on the SBA changes recently, which is attached here, where I cover some of this. Although in theory you can now get a business acquisition done with $0 down so long as a seller note is on full standby for as little as 2 years, I have yet to see any lenders provide this option. Based on my discussions with the 50+ SBA lenders we work with, most have indicated they are still going to require 10% equity in the majority of the transactions they do. They may consider less or 0% equity on a case by case basis, but there needs to be some very, very strong reasons. So in general I would not plan on acquiring a business without 5 to 10% equity at a minimum with SBA financing.

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reply by a searcher 2yrs ago
from Louisiana State University in Phoenix, AZ, USA

Are there commercial entities that provide the temporary equity injection to get over the hump specifically for SBA deals