I'm typically looking at a 10 year SBA loan option for debt for business acquisitions. Is there an avenue to structure a longer tenure loan if real estate were included as part of the transaction, provided the real estate is of comparable value to the business?
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Option 1: You could get two different SBA loans. One at 25 years and the other at 10 years.
Option 2: If the real estate purchase price is more than the business acquisition, you could do both in one SBA 7A loan and get a 25 year amortization on the entire debt. This option is going to give you the lowest payment because all of the debt gets extended out over 25-years.
Option 3: If the business purchase is more that the real estate purchase, you could still put both into one loan. However, they would do a blended amortization with 10 years on the business and 25 years on the real estate, and you would end up with a term between 10 and 17.5 years. You would still even up with a lower payment by doing it this way because the business debt gets extended out then you would by doing both of them separately.
Option 4: In some cases you can use an SBA 7A loan for the business purchase and an SBA 504 loan for the real estate purchase. The advantage of this option is you get a 25 year fixed rate on the SBA 504 portion of the loan and a fixed rate on the Bank portion of the loan, and only 40% of the real estate purchase ends up guaranteed by the SBA, opening up additional SBA availability. However, many SBA 7A lenders will not want to do the business purchase unless the real estate is also tied into it, so that can be a hurdle to overcome. But if you have a deal where the debt need is over $5 million on the SBA 7A product but real estate is involved, it is a way to lessen the SBA exposure so you can do both.
If you want to discuss options in more detail I would be more than happy to at any time at --@----.com