$5 million

As a buyer, you have 3 options to come up with the SBA required down payment. You can use a combination of these 3 options. Please keep in mind, that you are required by the SBA’s lending guidelines to come up with a down payment (equity injection) of 10% which is based on the total project costs. For a business purchase, the total project costs includes the purchase price of the business + everything else (working capital, closing costs, buyer legal costs, buyer financial due diligence, SBA guaranty fee, etc.) The 3 options are those below:

• Cash – the cash from you as the buyer and/or investors could theoretically comprise the entire 10% down payment

• A partial standby seller’s note: This is a seller’s note that has no payments on it for the first two years after closing (during which time interest accrues but isn’t paid), followed by payments in year 3 through year 10.

• A full standby seller’s note: This is a seller’s note that is only accruing interest while the SBA loan is outstanding. Payments can start on it and/or it can be paid off once the SBA loan has been paid in full to the bank
Please keep in mind: Banks can be (and often are) more conservative than the SBA’s baseline requirements, and most banks require that half of the 10% down comes from buyer and/or investor cash

If you are doing what’s called an “expansion acquisition,” the answer is “Yes.” If you buy a business in the exact same industry (identical 6 digit NAICS code) with the exact same ownership group (both individuals and ownership percentages), same geography (subjective, but typically interpreted as the same state), then you can qualify for 100% financing between a combination of the SBA 7(a) loan and the seller’s note. Please note that your existing company will be required to either be a signer on the loan as a co-borrower or a corporate guarantor

Yes. You are allowed to have multiple SBA loans outstanding simultaneously. You can have up to $5 million of SBA loans outstanding which you are personally guaranteeing at any point in time

No. SBA and banks do not typically impose specific net worth requirements. Pioneer Capital Advisory has previously financed a 25 year old client that bought a $3.3 million home service business with a net worth of $160,000. So long as you as the buyer have sufficient post-down payment liquidity (cash and/or taxable stocks on hand) of which the amount is subjective, there isn’t a net worth concern or requirement that the SBA and/or banks typically impose