Based on the post activity, it seems like there's a lot of interest in SBA loans across a number of the posts on here. I went through the SBA process in late 2016, early 2017 and closed on a loan to acquire The Wright Gardner in early 2017. I find myself regularly talking to other search entrepreneurs and imparting my advice on the process, and decided to write down some of my tips and biggest learnings from going through the process....
First some pros/cons of using SBA loans
-They tie up any real estate to your name - I had to pledge every real estate asset to my name as collateral securing the SBA loan. This creates some nausea and ongoing maintenance work like re-submitting proof of insurance every year
-You must personally guarantee the loan, and so will anyone else holding title on the collateral (in my case, my wife)
-Eliminates many structuring possibilities. Sellers must exit the equity completely. It's possible to structure around this on the back-end, but it's kind of cheating. The SBA rules require a full transfer of equity to the buyer and don't allow for the seller to retain. This forecloses some potentially favorable structuring mechanisms such as earn outs and other equity retainer mechanisms for the seller
-10 year term is better than you'll get anywhere
-the interest rates, while floating, are better than you'll get anywhere
-re-amortization amidst de-levering - if you have surplus cash and want to de-lever, you can throw a pile of cash at the loan and the lender will re-amortize it, which will cut your payments, freeing up cash flow for other purposes. That's nice financial optimization flexibility to have