SBA FAQ's

Continuing with the theme from today's conference call I am posting the beginning of the article that I recently wrote that is continued on the website, Its all about using SBA Financing for the purchase of a business.

Recently, a prospective client asked about financing an upcoming business acquisition. I immediately asked whether the business opportunity also came with real estate or if it was the purchase of a business consisting only of furniture, fixtures and equipment, a work-in-progress and the client list. He said that it was a business acquisition with two five-year lease options.

The scene was set for a typical U.S. Small Business Administration (SBA) 7(a) loan. "Typical" is probably not the best word, however, because each 7(a) loan is different. The only similarities between the range of 7(a) products are that they are SBA-guaranteed and that they are required to be collateralized as much as possible.

Most businesses that are sold for less than $2 million are situated in a leased facility and sold without the real estate. The 7(a) is the only SBA program that allows for the purchase of a business without the accompanying real estate. The SBA does require that the business have a lease agreement in place for the length of the loan term, however, or at the very least, additional option periods to cover the term.

To read the entire article click here Common SBA 7a Questions