Are SBA lenders requiring the traditional 1:1 rule for sellers equity roll?


Example below - $5MM EV deal and put $4MM of debt on it with the remaining $1MM split b/w buyer injection and seller equity roll...say $190,000 equity roll to keep under <20% PG threshold + $810,000 buyer equity raise via LPs). The disadvantages to buyer are obvious (seller is taking a lot of $ off the table and still retaining a very large ownership stake w/o PG). Is SBA allowing you to break from that 1:1 ratio?

I understand that if buyer was injection all the equity themselves you could have a 1 or 2 or 3x step up and that would solve this problem, but if you're raising outside equity from LPs, they'd be the only ones benefiting from that step up, not the searcher with the remaining equity pool.


Curious if people have seen deals where that rollover equity is treated more on an unlevered basis ($140,000 / $5,000,000 or 3.8% pro-forma ownership). Maybe even give them a step up to 5%.......curious if there are banks doing this.