Basic SBA Question

by a searcher

3 years ago

Hi,
If I buy a business for $1M, incl closing and loan fees, and I put down 20% and get the other 80% in SBA loans. How much of the $800K should I be able to back with personal assets and equity in addition to the 20% I put in the business?
I'm trying to answer what seems like a basic question on SBA but can't seem to find an answer online. I'm also not willing to reach out to a bank with such a question in fear on immediately coming across as non-credible.

TIA!

1 like
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8 comments

searcher from Tufts University

In my experience the "personal guarantee" component of SBA financed deals is more about ensuring that you have skin in the game and less about backstopping the deal with additional collateral.

3 years ago | like reply | 0 likes

searcher from University of Texas at Austin

You shouldn't be afraid to ask this to a banker. In my experience, you will get various answers on many of your questions from each different banker. Also, you should plan to get quote from multiple banks (4-6?) as they will have very different terms. I quickly learned that the structured SBA loan process isn't all that structured and strict!

3 years ago | like reply | 1 like

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