There are some game-changing updates to the SBA program every entrepreneur should know about. Keep reading to learn more about them and discover how they can play a pivotal role in helping you achieve your goals.
A Word About Sellers’ Notes on Standby
Before we delve into the updates to the SBA program, it’s important to understand what a seller’s note on stand by is.
In the context of Small Business Administration (SBA) loans, a “seller’s note on standby” refers to a specific financing arrangement that can be used during the sale of a business.
When the owner of a business is selling and part of the purchase price is being financed by the seller via a seller’s note (also known as seller or owner financing), the SBA may require this note to be placed on “standby” as a condition of the SBA loan being granted to the buyer.
SBA 7(a) Options for Business Acquisitions
By acquiring an existing business you can gain immediate access to new customer bases, established brand recognition, and operational infrastructure that can take years to build from scratch. Here’s how you can leverage the 7(a) program to achieve your goals.
Key Employees
Key employee(s) can buy the company they have worked at for at least 2 years with zero percent down with the seller carrying a 10% note on standby.
Buyers With Direct Industry Experience and Other Buyers
Buyers with direct industry experience can put down a 2.5% minimum with a 7.5% seller note on standby.
All other buyers can put down a 5% minimum with a 5% seller note on standby.
Buy-Ins
Buy-ins or partial change of ownership are now allowed with at least a 2.5% buyer down payment.
Expansion
100% financing is available for expansion through acquisition (for example, buying a competitor in the same geography.
SBA 7(a) Options for Owner-User Commercial Real Estate
Owner-user commercial real estate refers to a situation where instead of leasing from a third party, a business operates out of a property it has ownership.
This can provide several benefits such as control over the premises, potential appreciation in property value, and potential tax advantages.
Although this is not a new provision, it’s worth noting that 100% owner-user commercial real estate financing is available through the SBA for rent replacement or expansions.
Gellyfish: Certainty of Execution in Commercial Loans
At Gellyfish Commercial, we offer commercial financing solutions with the certainty of execution you need to take your business to the next level.
We are located in Riverside, and work with clients all over California and beyond. Contact us today by email (info@gellyfishcommercial.com), telephone (877-800-4493), social media (Facebook, Twitter, LinkedIn), or through the live chat on our home page to schedule a free consultation.
