SBA Lender requirements

searcher profile

April 19, 2023

by a searcher from University of Oklahoma in Dallas, TX, USA

Is it common for SBA lenders to ask for P&L and balance sheet of my other business (unrelated to target acquisition). Required as part of SBA SOP or just specific to individual lender since I mentioned I have another existing business?

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commentor profile
Reply by a lender
in United States
SBA SOP requires all bank or nonbank lenders to review other business affiliates owned 20% or greater of ALL proposed new owner(s)/personal guarantor(s) of subject business acquisition loan project. This includes the last 3yrs IRS filed business tax returns of ALL other businesses 20%+ owned, including most recent month-end 2023 YTD P&L and balance sheet. I have seen some bank underwriters case by case ask to see financials of other businesses owned less than 20%. It wouldn't make sense for the government to guarantee a bank change of business ownership loan if the proposed transitioning owner(s) own other affiliates/businesses that are presently losing money, reporting major losses. Yes, the stand alone debt service coverage of the proposed business supporting the SBA loan project debt it a must, however, you can bet every bank will want to see the overall global debt service coverage of all businesses. What is important for business buyers to remember is that the SBA doesn't provide the actual money/loan for the sale transaction. The bank the business buyer is working with provides that actual money/loan and the SBA/government offers the loan guaranty ONLY if the bank followed SBA SOP credit guidelines 100%. Where it becomes most confusing and challenging to navigate for business buyers looking for best bank loan structure to support their change of business ownership loan project is that every bank or non bank lender has their own in-house business underwriting guidelines to follow, on top of the SBA SOP.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Unfortunately any businesses you have a controlling ownership in the Bank is not going to request only a profit and loss and balance sheet for, but they are also going to request a debt schedule and potentially A/R and A/P reports as well. As already stated, the SBA requires the Bank to do a global cash flow analysis and to analyze all affiliate businesses. If you need a further explanation or assistance, we are more than happy to answer any questions you might have. You can reach us here or directly at redacted
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