HOW DO YOU DECIDE ON TERMS FOR INVESTORS IN AN SBA DEAL?

Hi everyone,
If you are doing a deal where you're only needing to raise 5% of outside investor equity, the seller is holding back 5% and the rest is your PG against SBA debt, how do you decide on an investor economics split? I know you have to give them a step up but how much?

To put some #s here, the purchase price + transaction fee is $8m, SBA gives you $5m, seller holds a note for $2m, you raise $600k from investors and the seller holds back $400k on full standby for her "equity". How would you calculate what % you should be giving investors?



share: