Latest SBA Changes and Current Acquisition Conditions with Stephen Speer
Jul 19, 2023
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Stephen Speer, Founder of Ecommerce Lending, discusses SBA changes, owner equity roll, and seller notes in business acquisitions. Insights into SBA funding success, current loan conditions, and future rate predictions. Evolution of SBA regulations, innovative deal structures, and navigating changes for business acquisition.
SBA rule changes allow sellers to retain equity, reducing buyer risks and enabling creative acquisition strategies.
Buyers can use seller equity as a down payment, potentially resulting in no-money-down deals and diverse deal structures.
Deep dives
Evolving SBA Loan Changes and Creative Deal Structures
The SBA specialist, Steven Spear, discusses substantial changes in SBA loan regulations that now allow sellers to retain equity in business sales, aiding buyers in reducing risks and facilitating smoother transitions. This shift enables potential no-money-down deals as buyers can use seller equity as a down payment, sparking creative acquisition strategies and potentially boosting deal activity.
Enhancing Buyer Opportunities with Seller Equity Involvement
The updated SBA guidelines permit sellers to maintain equity post-sale, offering buyers valuable operational expertise and facilitating smoother transitions. Moreover, this change allows buyers to purchase businesses with reduced or potentially no upfront capital, driving opportunities for structured deals and including managers or generational transfers in business acquisitions.
Streamlining Acquisitions with Seller Notes and Equity Injections
The revised SBA regulations introduce flexibility in deal financing by accepting seller notes as equity injections, potentially covering up to 10% of the purchase price. This innovative adjustment can lead to reduced financial burdens for buyers, encouraging acquisitions and fostering diverse deal structures while awaiting further clarifications and potential lender-specific overlays.
Strategic Pre-Qualification and Patient Acquisition Approach
Steven Spear emphasizes the value of pre-qualification for potential business buyers to streamline their search process and enhance their readiness for acquisitions. He underscores the significance of evaluating business management skills alongside financial considerations to ensure successful transitions. Patience in the acquisition journey is advised, reminding buyers that patience and thorough due diligence are crucial in finding the right business fit.
Stephen Speer is the founder and CEO of Ecommerce Lending which specializes in SBA loans. He’s done over 500 transactions with only 3 deals failing after purchase.
We dive into…
SBA Changes and Landscape
Owner Equity Roll
Seller Note vs Owner Equity Counting as Down Payments