SBA Expansion Loan?

searcher profile

March 24, 2025

by a searcher from Washington University in St. Louis in New York, NY, USA

Anyone have insights into the terms and details behind an expansion loan? A future strategy for my current acquisition will be buying others in the space and structuring it as an expansion loan. I have heard no down payment is needed if structure as such. Any other terms and limitations I should be aware of?


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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Alex is correct on the expansion loan. There is no timeframe for when you can do an expansion loan though. We have done them as early as 6 months after the first business has been purchased, but most lenders do prefer to see a year or two of you successfully operating the first business in order to do so. You can finance 100% of the purchase price using the expansion, but the cash flow must be there to support that level of financing. I would be happy to get on a call to talk through the options for an expansion loan. You can reach me here or directly at redacted Also keep in mind using SBA 7A funding you will still have the guarantee limit of $5 million.
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Reply by a searcher
from Vanderbilt University in Denver, CO, USA
As an additional note from the SBA SOP, in case you are trying to include seller debt as part of the equity injection from an SOP perspective. From the SBA SOP:

i) Seller debt may not be considered as part of the equity injection unless the seller’s loan does not include a balloon payment and, for the first 24 months of the 7(a) loan, the seller debt is on: (a) Full standby; or (b) Partial standby (interest payments only being made) and the Applicant’s historical business cash flow supports the ability to make the payments, and at least a quarter of the SBA-required equity injection is from a source other than the seller.
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