Deal Priced above SBA Funding Limit

by a searcher from University of Southern California

6 months ago

Is it common for deals to be priced above what the SBA is willing to fund? I ran across a deal in which the seller was requiring a significant cash down payment because the SBA was only willing to fund to an amount well below the deal price.  They have turned away a couple offers already.  The broker assured me an extensive valuation and QOE was completed and would be shared.  I walked away not having that amount of cash, but just curious if this is common.

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8 comments

lender from California State University, Sacramento - College of Business Administration

We have an exec summary template for you to share deal details if you’d like to share on the next one. We also have a cashflow model template for you to decide about the merits of the opp. Email and I’m happy to share. --@----.com

6 months ago | like reply | 1 like

lender from Eastern Illinois University

I would be happy to have a discussion from a lending perspective. There are creative ways to get the financing to work on a higher purchase price, but as mentioned above you need to be sure that price is still supported by cash flow and the business valuation. Just because you can structure a deal and make the numbers work does not mean that structure is ultimately in your best interest or you still are not over-paying for the business. But we have put some very creative structures together in the past. Please let me know if you want to walk through options. You can reach me here or directly at --@----.com Good luck.

6 months ago | like reply | 1 like

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