Basic SBA Question

July 03, 2020

by a searcher in Chicago, IL, USA

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!

Reply by a searcher
from University of Texas at Austin in Lexington, KY, USA

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!

Reply by a lender
from Marquette University in St. Petersburg, FL, USA

The stronger your personal financial statement is, the easier the path to approval, especially in the current economic climate. Usually you are only required to secure the guaranty with equity in real estate if that exists. Otherwise your assets are not specifically pledged as collateral.

+6 more replies.

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