How much can I borrow from SBA for an acquisition loan?
The SBA 7a program, which can be used for business acquisitions, has a maximum loan size of $5 million according to the SBA.
What is a seller’s note for a business acquisition?
A seller’s note is a loan that the seller provides to the buyer in a business acquisition. For example, a buyer and seller might agree to an acquisition price of $1 million. The buyer might invest $100,000, secure a loan from the SBA for $800,000 and the seller might agree to a seller’s note for the remaining $100,000. The seller would receive $900,000 of the $1 million purchase price at the time of sale, and would receive the remaining $100,000 according to the terms of the seller’s note.
Does the SBA require a seller’s note to be on full standby?
Yes. The SBA will require that any seller’s note is on full standby to the SBA’s loan.
What does full standby mean for a seller’s note?
Full standby for a seller’s note, which is required by the SBA in a business acquisition, means that the SBA loan will need to be repaid in full before the seller can start to be repaid according to the terms of the seller’s note.
How many years of projections does the SBA require for an SBA acquisition loan?
The SBA will require at least 3 years of financial projections for a business acquisition loan. They will also require at least the first 18 months of projections to be monthly projections.