FAQ – Loan Structure

Can seller-subordinated financing be used as the equity portion of the project?

Yes, however, in addition to subordinating to the bank and SBA, the seller will be required to sign a Standby Agreement disallowing principal payments on the loan. If the applicant has made several years of prompt payments on the SBA loan, and the cash flow and financial condition both support it, a request to the SBA to begin allowing principal payments to the seller might be approved.

Are SBA loans assumable?

Yes, as long as the SBA has an opportunity to review both corporate and personal financial information on the proposed borrower(s) in advance of the sale. One note of caution: the release of the original borrower's personal guaranty is NOT automatic with a loan assumption.