The new SBA rules per the SOP state the following for partial buyout
For Standard 7(a) complete changes of ownership:
SBA revised guidance to state that seller debt may not be considered as part of the equity injection unless either it is on full standby for 24 months of the 7(a) loan, or
- a debt that is on partial standby (interest payments only being made) may be considered equity when there is historical business cash flow available to make the payments, and
-at least a quarter of the SBA-required equity injection is from a source other than the seller.
How long does the debt have to be on partial standby (int only) if there is historical cash flow avaliable to make the payment and the buyer brings in 2.5% of the equity injection?
Can the seller note be at a partial standy for the term of the SBA loan (10 years) vs just 24 months?
Can the partial standby note be interest only for X months and then convert to a balloon payment contingent on some historical KPI ( Trailing 12 mos EBITDA > $X)
Can the partial standy int only for 7 years at X % rate, and then P&I for the last three years at a different rate?
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