Generally a lender of SBA is the choice for the financing of small company, including acquisitions. The administration of the small company of government the of the USA provides a guarantee to a lender for a part of the loan, and this of the marks the viable loan for the lender. The best aspect of the loan of businesses of SBA (called the program of SBA 7(a)), is that it is based on the cash flow of financing, real estate, are to receive and permanent assets. It is also relatively simple, and for strong companies clean the process can be rather easy. Other side you can pass by the hell one or the other because the isn’t of businesses clean and strong, or because you selected a lender that the doesn’t know completely what they do. I just spoke to a lender today who had a purchaser with a criminal record – apparently this help of doesn’t the process one or the other.
With Preferred SBA lender is one which can make their own decisions of placement rather than must subject to SBA each time for approval. I much prefer to function with a preferred lender. I’ve considering tables of risk for one of these large lenders, which enumerates which types of businesses they like to place, and what are the conditions of installment. For example, the dental and veterinary practices are with the top of the list, and require only one installment of 10% and they will throw even in working capital of exploitation of 10% on this (significance, primarily, no money downwards). Apparently the veterinary surgeons and the dentists are very good to remain in the businesses. At the bottom of the list was a couple of the concessions which were in the trouble, and for those you would probably take the same approval obtaining of difficult moment of the bank in all the conditions. This list changes all the hour so much any point into calling the concessions here. The lender is always in danger to the a-guarantee part of the loan, and the lenders thus always need guarantees as much collateral and personal which they can obtain from the purchaser, but if there are enough cash flow of financing (and stable history of cash flow of financing), then the lenders seen by I’ve give up much of that (although some, like personal guarantees, are required by the SBA). The loan of maximum SBA 7(a) is $2 million, but the senator Kerry presents the legislation after this month (February 2008) which can raise the limit to $3 million. That would help me completely a little because I precisely prove to sell the companies which could employ a higher limit.
There is also a programmed of loan of SBA for the real estate, called the program of SBA 504. It is much more complex and certainly can be a longer process to be achieved. You can mix and matched too. In 2007 we sold a steel company of manufacture to which the purchaser employed of the 504 loans for the real estate and one 7(a) for the businesses. You must also qualify like small company. The SBA has a table which places the maximum size thus that a company can be, it is important to seek your type of company to see what it is. For much of companies it is $6.5 million in the sales, but for others it can be $16 million, or even measured in terms of employees – to 500 employees. That the table of size killed a business I worked above because I had a company which wanted to acquire another company and all the size of the combined company was going to be above the limit of size of SBA. This put the business in a kind of no-team the ground.