SBA Loan with Seller Rolling Equity

searcher profile

April 15, 2025

by a searcher from Northeastern University in Minneapolis, MN, USA

Has anyone figured out creative way to let seller roll more than the 15% allowable with an SBA loan? Whether its truly rolling equity or a "back door" method?
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
The SBA now allows transactions both where the seller is rolling equity as well as where the seller is retaining equity with a stock purchase. Technically the maximum equity the seller can hold and avoid a personal guarantee is 19% of the value of the business. If the seller holds more than 19%, then they are required to guarantee the loan. There are some lenders that prefer the seller does not hold more than 15% so they are not coming up against the 20%, but we have done plenty of deals at 19% and have lenders will to do that. Outside of that, there is no official way to allow a seller to hold additional equity. I hope this helps. If you would like to discuss further, you can reach me here or directly at redacted
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Reply by a lender
from University of Southern California in Los Angeles, CA, USA
Brad's answer is 100% correct. Lot's of lenders will allow more than 15% but if you approach 20% or more the seller will have to provide PG. In fact, you might even have luck structuring it as a buy-in instead of a buy-out where you the buyer are doing a partial buy-in by buying 70-75% of the business instead of 100%. Can potentially do the deal with 0% down via this structure.
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