Need A Competitive Advantage in Financing Business Acquisitions?

Feb 14, 2019 | Uncategorized

The SBA 504 Loan Program provides a great benefit for the borrower with low down payment and fixed rate options!
 
The SBA 504 & SBA 7(a) programs also work great together when there’s a mix of project costs with the acquisition.
 
The 504 Loan Program is a great option for the fixed asset part of the transaction and the 7(a) Loan Program can be used for the non-fixed asset part of the transaction.

Here’s an example:
(Acquisition of an existing business)

  • Real Estate              $   4,500,000
  • Equipment               $      450,000
  • Inventory                  $  2,500,000
  • Non-compete           $       50,000
  • Total                          $  7,500,000

SBA 504 Project – $4.5 Million – Real Estate
Third Party Lender              $2,250,000   50%
SBA 504                                $1,575,000   35%
Borrower Contribution          $675,000   15%
TOTAL:                                $4,500,000         
 
SBA 7(a) – $3 Million – Equipment, Inventory, Non-Compete
Lead Lender – SBA 7(a)     $2,400,000   – 75% Guarantee
Borrower Contribution          $600,000                              
TOTAL:                               $3,000,000                  

When it comes to financing fixed assets,
the SBA 504 Loan Program will Save $’s in Fees for the small business owner:

FY2019 Fee Comparison 50/40/10 Structure    SBA 504       SBA 7(a)
$    750,000 Project                                                $10,494                    $ 15,188
$2,500,000 Project                                                 $29,120                    $ 60,781
$5,000,000 Project                                                 $55,724                   $124,063