Down payment to purchase existing business with seller financing?
Ex: Ask is 1.5MM; seller financing $500k; Bank/SBA 7A Loan $1MM with 25%
down. Is the down payment to the Bank/SBA based on the borrowed amount of 1MM
($250k)or the 1.5MM ($375k)?
I see that you are focused on the 7a program. Have you looked into the 504
program. The 504 program can really help finance the physical assets - it
will not provide working capital or allow you to purchase goodwill - but,
could finance the assets of the business.
It should be based on the amount borrowed. But, since you are also borrowing
the $500K from the seller - they could include that amount as well as it
relates to the bank's overall risk. The best bet is to approach it as the
down on the $1MM. If they dislike that and want it on the full purchase price
- then negotiate for a 20% down - not that 25% you show here.
It is all about negotiation.
Plus, does the seller know that they will have to take a second position to
the bank or subordinate the loan to the bank?
It should be based on the amount borrowed. But, since you are also borrowing the $500K from the seller - they could include that amount as well as it relates to the bank's overall risk. The best bet is to approach it as the down on the $1MM. If they dislike that and want it on the full purchase price - then negotiate for a 20% down - not that 25% you show here.
It is all about negotiation.
Plus, does the seller know that they will have to take a second position to the bank or subordinate the loan to the bank?
Hi, Check out the resources available in our SBA Loans Program section, including information about 7(a) Loan Program.
Thank you, but I checked out the 7(a)section about 3 times and could not find
the answer to may question. May be you should check out the 1st response I
received and put that on the 7(a) site.
BMT | Window Shopper | 11/6/2012 - 5:01 am
program. The 504 program can really help finance the physical assets - it
will not provide working capital or allow you to purchase goodwill - but,
could finance the assets of the business.
cashloans | Window Shopper | 10/28/2012 - 12:23 pm
the $500K from the seller - they could include that amount as well as it
relates to the bank's overall risk. The best bet is to approach it as the
down on the $1MM. If they dislike that and want it on the full purchase price
- then negotiate for a 20% down - not that 25% you show here.
It is all about negotiation.
Plus, does the seller know that they will have to take a second position to
the bank or subordinate the loan to the bank?
jeandanek | Window Shopper | 10/31/2012 - 12:38 pm
jtowbin | Community Moderator | 10/26/2012 - 12:54 pm
jeandanek | Window Shopper | 10/31/2012 - 12:37 pm
the answer to may question. May be you should check out the 1st response I
received and put that on the 7(a) site.
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