Future of SMB investing

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by a searcher from Louisiana State University Health Sciences Center New Orleans
in New Orleans, LA, USA

3yrs ago

Future of SMB investing

How does SMB investing change now with the new SBA changes with potentially less equity injection? Less opportunities? Only big deals needing equity investment? Not as favorable terms for the investor?

Thoughts?

1 Like

145 Views

reply by a lender 3yrs ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

We are still in the process of assessing the changes and reviewing the additional guidance being produced. I think at this moment the two biggest take-aways is that you can do a partial business acquisition now. But doing the partial business acquisition requires you to buy into the existing company versus doing an asset purchase with roll-over equity from the seller. Also, you can get away with as little as 2.5% down with a seller note on standby for 2-years (no longer needs to be on standby for 10 years) based on the SBA rules. However, we will have to see if lenders allow deals to get done with only 2.5% equity. Historically you could do as little as 5% equity, but many lenders would not go that low or would only do so in certain circumstances.

Keep in mind none of this goes into effect until August 1st, and changes could happen prior to that date.

More to follow with a post in the next few days. Good luck with your search. For questions you can reach me at redacted

reply by a searcher 3yrs ago
in Maryland, USA

I was hearing part of the change is to also reduce the amount of paperwork needed to help streamline the loan process (not sure if it's on buyer, seller or both sides).
That would definitely be a welcome change if so but we will have to wait until things shake out.