SBA Loans Approved in the Sacramento Area
SBA loans continue to be the primary source of finance for new entrepreneurs whether they are wanting to start a business, buy an existing business or buy a franchise. Seller finance remains an option for the seller that is willing to carry the finance on the remainder of the purchase price for their business, but for that buyer the seller is looking for a large down payment.
If you are looking to sell a business in the Sacramento area or indeed anywhere in California or the US, there are local, regional and national lenders willing to assist you. It’s been my experience that the large national banks such as Bank of America, Wells Fargo, Chase and US Bank continue to offer loans but their loan application and approval process can be slow and frustrating.
SBA lenders motivation to approve loans
Local or regional lenders have the motivation to approve loans but they tend to specialize in industries so they can develop the knowledge of the performance of that industry and its risk profile.
For example, I was recently successful helping two young entrepreneurs obtain an SBA loan to build a craft brewery in Diamond Springs, CA. Diamond Springs, CA is near Placerville in El Dorado County.
These two new entrepreneurs had approached a number of SBA lenders to obtain a loan. At different times with these different banks they were assured their loan application was on target and would close shortly. Despite these assurances, at the last moment, the SBA lender would find a reason to decline the loan. Very frustrating and a waste of time; not only for the borrowers trying to get their SBA loan approved, but the for the seller of the real estate the borrowers were wanting to buy.
SBA loans approved in the Sacramento CA area
The SBA has a regional office in Citrus Heights, CA. Citrus Heights is located in Sacramento County and not too far from my office in Carmichael, CA.
Because the SBA is a government agency, they create and distribute reports that provide the status of which banks are lending, how many SBA loans they are approving and the total value of these SBA loans.
If you would like to know the total amount of SBA loans approved through the SBA Sacramento District Office, SBA loans approved by bank and SBA loans approved by county from October, 2014 to May, 2015 the details are available below.
Because I’m very active with SBA loans, I receive a copy of the different reports and you can read this information to help guide you about who is and is not approving SBA loans.
- Click this link to see SBA Sacramento District office loans approved from October, 2015 to August, 2016.
If you would like to apply for an SBA loan to buy a business or franchise it is a formal process. There are many forms to complete and you will need to have a good credit score, a good credit history and a downpayment of about 20% of the amount you wish to borrow if you are buying an existing business and be approved for an SBA 7(A) loan. The loan repayment is generally 10 years.
If you would like to buy real estate, the SBA loan you are seeking is a 504 loan and this generally has a term of 20 to 25 years.
If the loan you are seeking is for real estate and a business this loan would be generally be reviewed as an SBA 7(a) loan with repayment terms from 15 to 25 years.
One of the unfortunate parts of an SBA loan is that it is a government program and has many technical rules and regulations. It’s very safe to say that there is no one size that fits all.
More information for a business seller
If you are looking at selling your business and want your buyer to get an SBA loan, it is critical your financial statements are up to date and accurate. The SBA lenders will want a copy of your last three year’s tax returns, a current profit and loss statement and a balance sheet.
Part of my process when selling a business is to see if an SBA lender is willing to review the business and provide an SBA prequalification letter. It doesn’t guarantee the business will get a loan, but it does allow a meaningful conversation to take place with a qualified buyer to show them the business is good and strong enough to qualify for an SBA loan. A loan will then be approved after reviewing the ability of the buyer to qualify.
This link will connect you to a web page with some more information about the benefits to a seller of an SBA loan.
If you have questions about valuing your business or qualifying for an SBA loan, give me a call on 916 570-2674.
More information for a business buyer
If you are looking to buy an existing business or a local franchise and want to use the finance available from an SBA loan, this link will connect you to a web page with some more information about the benefits of the SBA loan program to a business buyer or franchise buyer.
To qualify for an SBA loan if you plan to buy an existing business, you will need to bring a down payment of about 20% of the purchase price, a good credit report, a good FICO credit score of at least 700, hopefully higher and a good character. If you have a criminal conviction it will be very difficult to get an SBA loan approved.
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, please visit my webpage Services and choose from the options available.
For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.