SBA Loan with Seller Rolling Equity

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

1yr ago

SBA Loan with Seller Rolling Equity

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 1yr ago
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.

reply by a searcher 1yr ago
from Northeastern University in Minneapolis, MN, USA

On your latter point, I think you are saying that I can pay for 70-75% of the purchase price with an SBA loan with zero down and the seller would keep 25-30%. But practically speaking, because I have no cash equity, can I really convince the seller to give me 70-75% of the equity? Have you seen this work before?