Hello all — I’ve been looking (very preliminarily) at two inventory-heavy businesses, one of which is a seller of imported flooring materials to commercial contractors, and the other is a classic car dealership. I'm trying to get a sense of two things related to financing as I try and evaluate the deals and put financial models together. I'm self-funded and not planning on taking on investors, and the idea has been to use an SBA loan and seller financing for ~90% of the total purchase price and a 401k rollover for 10% (obviously adjusted based on whatever the banks end up requiring).

1) Would the inventory be financed through the SBA loan or is there a different product that's better-suited (line of credit or similar)? I'm trying to get a sense of how I should be thinking about the debt service costs.

2) The current value of the inventory is not far off of the purchase price of each business. I'm wondering about how to think about what I can get financed. Should I be thinking about my theoretical upper limit for an acquisition (based on 90% debt) with or without the inventory? For example, let's say I have $1 for the down payment. Does that mean my upper limit is a business priced at $10 including the inventory, or excluding it?

Thanks very much for any thoughts/assistance.