Modeling Earndowns / Forgiveable Seller's Note with SBA Financing

by a searcher from Rensselaer Polytechnic Institute

1 month ago

I have been looking to utilize earndowns / forgiveable seller's notes on a few potential opportunities in order to bridge the gap. 

In a recent scenario I had a listing with a large growth in revenue/EBITDA in the TTM period. Given SBA financing will be based on 2023 actual tax returns, I am looking to bridge the gap and mitigate risk with an earndown. Additionally I understand that some SBA lenders will include this obligation in the DSCR calculations assuming no forgiveness. 

I'm looking for help in modeling this out so that I can identify how to structure it. If anyone has utilized this tactic successfully I would appreciate any advice. 

Thank you.

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lender from University of Missouri - Columbia

We typically include the debt as a part of DSCR assuming the most conservative nature that you have to pay the full debt. It depends on the scenario though. If you'd like to talk further you can reach out here or at --@----.com

1 month ago | like reply | 0 likes

intermediary from The University of Chicago - Booth School of Business

Currently working on one where the bank has approved the forgivable note. It is not part of DSCR. Happy to talk.

1 month ago | like reply | 0 likes

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