We are a Commercial Loan Brokerage that offers SBA as well as conventional and non-bank financing solutions, so I can answer this question from that perspective. We find most Borrowers prefer to use SBA financing if there deal would qualify for SBA financing. The primary reasons why are outlined below: 1) Low required down payment as a standard rule of 10% but even down to 5% if the seller carries back a note for 5% or more of the purchase price on full standby for the life of the SBA 7A loan. 2) Guaranteed 10 year term on business debt only and options to use a blended amortization if real estate is involved pushing the business acquisition debt amortization out and lowering required monthly payments 3) Easier path to approval as the loan is 75% and in some cases 90% guaranteed by the government, taking much of the risk off the table for the lender. 4) The SBA does not require the loan to be fully collateralized by hard business assets. 5) Generally speaking, no financial loan covenants on SBA loans. 6) Minimum debt service coverage ratio to qualify of 1.25x and only required in the previous fiscal year by the SBA (as of today that isredactedLenders typically require the 1.25x or higher DSCR not only in the previous fiscal year but also in the TTM, YTD, and sometimes two years back, but the SBA minimum is pretty low. If a deal qualifies for SBA, the above benefits are pretty attractive and will make a strong case for a buyer to do an SBA 7A loan on their acquisition. Although the underwriting guidelines have become a bit more restrictive, they are still way less restrictive then what conventional and non-bank lenders typically require. We definitely see more clients today wanting to take advantage of non-SBA financing. The reason why are usually as follows: 1) The seller wishes to retain equity but does not want to sign a personal guarantee. 2) The buyer does not have the required down payment personally to meet the SBA requirements. 3) The buyer is looking to do the loan non-recourse with no personal guarantee. 4) The buyer(s) is not a US citizen, so they don't qualify for SBA financing. 5) It is a partial business acquisition where a new buyer will own 50% or more, which is no longer allowed under SBA financing with the new SOP. Although all of these are good reasons not to use SBA financing. most borrowers do not realize conventional and non-bank financing is much more restrictive in the terms offered. To provide some details, please see below difference for conventional and non-bank lending versus SBA. 1) Although you have more flexibility in the capital stack, meaning you can have the seller retain or roll equity, you can use earn-outs, you can use unlimited investor equity, etc., the total loan to cost is typically going to be limited to the lessor or 50 to 60% of cost or no more than a 2 to 3x multiple of adjusted EBITDA. Although you can make some of this up via the other sources above outside of fresh equity, most lenders want to see between 10% and 25% in fresh equity in these transactions. 2) For business asset deals only you are typically looking at loan terms between 5 and 10 years. For asset light transactions, typically not more than 7 years on the term / amortization. Although some lenders can offer some flexible repayment terms, like non-bank lenders, many of these lenders do not start looking at deals until you have $2 to $5 million in adjusted EBTIDA. So you are more limited in options with smaller deals. 3) We usually see the minimum debt service coverage ratio these lenders underwrite to being close to 1.50x, and often they want to see it over multiple years, not just the last fiscal year like SBA requires. 4) Non-recourse is not always available. If it is a smaller deal getting financed by a bank or credit union, it is likely those institutions policies require a personal guarantee. This can sometimes even impact a seller if they are retaining a significant portion of the deal. The lender might want them to guarantee their ownership percentage. There are a lot more options for non-recourse with larger deals, transactions backed by strong equity groups, high DSCR and lower LTC deals, and deals done by non-bank lenders. 5) You are almost certainly going to have loan covenants in your transaction, at the very minimum a DSCR covenant but often a net worth covenants or balance sheet covenants to ensure the balance sheet is getting built up over time. Please note the above are general terms we see a majority of the time. There are always exceptions for certain deals, but those exceptions are not the norm, something in the range of what is outlined above is the norm. I hope this message helps people trying to understand the options better. It is really all about what the buyer is looking to accomplish and the fit each deal has within the lending markets. We do offer a complimentary review of transactions and help clients assess all options available to them and the pros and cons of each. If you are looking for an assessment or you just have questions about financing options in general. you can reach me here or directly at redacted