Wildly different overlays from banks on SBA loans

searcher profile

October 20, 2023

by a searcher in Tucson, AZ, USA

I am looking to buy a 1.5M to 2.0M business and have started contacting banks to find out their loan terms and see if they are easy to work with.



I've went through the list that the SBA.gov has on their site for SBA lenders in Arizona and called each one that does 7a loans. Of the 45 on the list, I have only been able to talk to eight who even understood how a SBA loan can be used to buy a business. Many only finance to existing business owners. Some banks wont even call me back, weeks later!

Chase wants 30% equity from the buyer and will not consider a seller note to make up any portion of the 30%.

The best overlay, so far, has been TFCU which wants 15% but 5 of the 15% can come from a seller note.

Is this a universal experience or am I going about things incorrectly?

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Just about any lender can offer SBA 7A loans. The majority of Banks offer them as an add on to standard lending they do. They do not lean into everything the SBA program offers. You want to get with a Bank that has an SBA 7A team that specializes in the SBA 7A lending program. Your big Banks tend to be much more conservative in what they will do SBA lending wise. Even among the specialty SBA lenders out there, you will find that most have internal loan policies that are substantially more restrictive then what the SBA will allow. So you need to find the right lenders that serve your market, industry, and know how to do a deal structured the way you have it structured. There are plenty of lenders that can do that, but sometimes it can be difficult to find the right one. You also want to be sure you get with the right lender within an institution that has a track record of getting deals done. There are a lot of individual loan officers that can waste your time if they are not good at getting deals done in their institution.

We are a Commercial Loan Brokerage Shop with over 500 funding partners and over 50 SBA funding partners. If you need assistance getting the transaction packaged the right way and in front of the right people, we would love the chance to assist you. You can reach me here or directly at redacted Good luck.
commentor profile
Reply by a searcher
from University of Virginia in Bethesda, MD, USA
Agree with ^redacted‌ - this platform has a number of active bankers who are well versed in SBA and can help you with your loan (vs. just cold-calling banks). Different banks will offer different rates though and have slightly different interpretations of the SBA rules, so make sure to call around. Good luck!
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