Does SBA Accommodate Earn Outs?

by a searcher from Cornell University

3 years ago

I know SBA has lots of quirks. Does anyone know if SBA has any lending restrictions on deals that are structured as earn outs and/or equity rollovers? I’d love to learn from peoples’ stories of success and failure when it comes to SBA loans and earn outs/equity rollovers.

3 likes
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15 comments

intermediary from Clemson University

Some of the information provided here has changed as of 8/1/2023 roll-over equity is permitted. "Earn-outs" are not permitted, but "Forgivable Seller Notes" are and they work the same way. I completed the first one in SBA history with Steve Mariani at Diamond Financial Services approximately 7 years ago.

3 months ago | like reply | 0 likes

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

Seller equity roll nor warrants or future conversion agreed to at time of close is not allowed per SBA rules.

3 years ago | like reply | 1 like

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