Finance options and buying a business in California.
It’s normal for a business buyer to require some form of financing to purchase a business. The two primary options are an SBA loan, seller financing, or a combination of these.
Most business owners are reluctant to offer seller financing because they are unsure whether their seller’s note will be repaid.
On the other hand, some business owners find they have an interest in selling their business to an employee. However, the employee may not have sufficient funds for a down payment. The solution, if the seller is willing, is to provide some seller financing. This may now enable the employee to qualify for an SBA loan to purchase the business, provided their credit score and credit report are acceptable to an SBA lender.
As you can see, there is a broad spectrum of options for combining SBA loans with seller financing to help both the seller and the 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, and the 504 loan, which is repaid over 25 years and is used to purchase real estate.
Some SBA lenders, if the loan request includes both a business and real estate component, will blend the 10-year repayment of the 7(a) loan with the 25-year repayment of the 504 loan. This is an excellent option for business buyers, as it allows them to extend the 7(a) portion of the loan for a more extended period. Both loans allow the borrower to pay off the loan without incurring a prepayment penalty, provided the loan is held for a minimum of two years.
SBA loan approvals
The SBA’s headquarters are in Washington, DC. However, to better serve the diverse regions of the United States, the company maintains regional offices. These SBA regional offices offer various services, including support to borrowers and lenders within their respective regions.
The SBA has a regional office in Citrus Heights, CA. Citrus Heights is in Sacramento County. As a government agency, the SBA also provides reports to the public on its lending activities.
As I’m very active with SBA loans, I receive copies of various reports from the SBA Regional Office in Citrus Heights. Here are some recent reports from the SBA, which may help guide you in selecting lenders that approve SBA loans.
Just remember, not all SBA lenders will approve every type of SBA loan request. Some SBA lenders like specific industries, while others do not. Each SBA lender has different criteria, but most SBA lenders require a borrower to have management experience, a down payment of at least 10% if 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 helpful if you are looking for an SBA loan.
Click this link to see: SBA loans approved in 2018
This link shows SBA loans approved by the 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 obtaining an SBA loan, please visit my webpage, Services, and choose from the available options.
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 assistance, you are welcome to send an email to Andrew Rogerson or call me at (844) 414-9700.