Buying a business as non operating owner with SBA 7a loan

searcher profile

April 25, 2023

by a searcher in Illinois, USA

Buying a business that has a GM in place or planning to hire a GM to run it and I will remain as non-operating owner and also be guarantor to SBA. Wonder if this is good idea something SBA would allow. Pros and Cons ?

I understand that the Seller cannot remain the GM for more than 12 months.

What kind of compensation structure GM should have to keep him engaged, motivated ?


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commentor profile
Reply by a lender
from University of Utah in Sandy, UT, USA
I would be concerned about the idea of a “passive owner”. The SBA and the bank will want you to be local and involved.
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