SBA Loans and Seller Financing
Its normal for the buyer of a business to need some sort of finance to buy a business. The two ways, in general, are an SBA loan or seller financing or a combination of both.
Most business owners are reluctant to offer seller financing as they are not sure their sellers note will be repaid.
On the other hand, some business owners find they have an interest to sell their business to an employee. However, the employee may not have much money as a downpayment. The solution, if the seller is willing, is to provide some seller financing. This may now allow the employee to qualify for an SBA loan to buy the business if their credit score and credit report is acceptable to an SBA lender.
As you can see, there is a wide spectrum of combing and SBA loan with seller financing to help the seller or buyer of a business.
SBA loan options
The two primary forms of SBA loans are the 7(a) loan which is typically repaid over 10 years or the 504 loan which is repaid over 25 years and it is to purchase real estate.
Some SBA lenders, if the loan request includes both a business and real estate, will blend the 10-year repayment of the 7(a) loan with the 25-year repayment of the 504 loan. This is a great option for a business buyer as it allows them to extend the 7(a) portion of the loan over for a longer period. Both loans allow the borrower to pay off the loan with no prepayment penalty as long as it is held for a minimum of two years.
SBA loan approvals
The head office of the SBA is in Washington, DC. However, to better serve the different regions of the United States there are regional offices. These SBA regional offices provide different services including support to the borrowers and lenders in their region.
The SBA has a regional office in Citrus Heights, CA. Citrus Heights is in Sacramento County. Because the SBA is a government agency, they also provide reports to the public on SBA lending.
Because I’m very active with SBA loans, I receive a copy of the different reports from the SBA Regional Office in Citrus Heights. Here are some recent reports from the SBA and they may help guide you with which lenders are approving SBA loans.
Just remember, not all SBA lenders will approve every type of SBA loan request. Some SBA lenders like certain industries while others do not. Each SBA lender has different criteria, but most SBA lenders want to see a borrower have management experience, a downpayment of at least 10% it the loan is for real estate and 15% if it is for a business, a clean credit report and a personal history with no criminal acts.
SBA loan reports
Here are some reports from the SBA loan office in Citrus Heights, CA. You may find the information in the report useful if you are looking for an SBA loan.
Click this link to see: SBA loans approved in 2018
Click this link to see: SBA loans approved by County in 2018.
Click this link to see: SBA 7(a) and 504 loans approved in 2018.
SBA loans and more information
If you would like more information about selling a business, buying a business, buying a franchise or a related service such as valuing a business or getting an SBA loan, please visit my webpage Services and choose from the options available.
Click this link if you own a business and want to know more about the benefits of an SBA loan.
Click this link if you are looking to buy a business and want to know more about the benefits of an SBA loan.
For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.