What deal costs can you and can you not roll into SBA financing?

searcher profile

April 04, 2024

by a searcher from Stanford University in Nova Iorque, NY, Estados Unidos

I'm a self-funded searcher looking for feedback on how much out of pocket at minimum I'll actually need to close a smaller deal,

Here are my questions:

1. What deal costs can you and can you not roll into SBA financing?
2. What are people actually spending out of pocket to close smaller deals recently?
3. Am I missing any major costs categories from the list below?

Cost categories list:
1. QoE

2. Legal

3. Bank processing fee

4. Tax

5. Other transaction costs, including appraisals, escrow, etc.

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commentor profile
Reply by a lender
in United States
Every bank SBA 7(a) lender has its in-house credit/closing policies regarding what third-party costs paid out of pocket prior to closing can be credited back and financed in the loan. They're all different.

I've seen some bank lenders only allow costs $500> paid in cash by the buyer/borrower to make the tracking per SBA SOP easier vs. paying for expenses with a credit card, paying off the card balance, etc. If it's a nightmare of a paper trail, the SBA closing team at some shops have the right to say no based on the paper trail of tracking.

I would track everything paid, including paid invoices/receipts and copies of bank and/or credit card statements reflecting the expense trail. The easier you make it for an SBA underwriter/closer to review and approve, the better chance you have of including the costs in the loan and crediting the borrower back at closing.

Some banks credit the borrower back in the working capital portion, and others credit toward the buyer/borrower required equity injection.
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
On an SBA 7A loan all of the Bank costs get rolled into the loan. You do have to put up a deposit for those costs, but that gets credit back to your equity at closing.

As for other deal costs, it depends on the lender what they will finance into the deal or not. Some lenders will not finance any outside deal costs into the loan. Others will include them in the loan. If included in the loan they typically include them in the total cost and whatever percentage of equity you are bringing to the table then increases based on that total deal cost.

I will let some other searchers cover the costs they are seeing for third party and attorneys. We don't always see it from our end if the client is paying for it separately.

If you have additional questions you can reach me at redacted or here. Good luck.
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