^redacted‌ I agree that some kind of limit on distributions could make sense, but if it were to apply to the preferred then it would need to apply to the common as well. If all distributions were prohibited until the SBA loan is repaid, it would make these deals much less attractive (largely uninvestible). Some kind of guardrails like partial cash-flow sweeps or minimum cash reserves would probably be a good idea to keep a level of control (and sanity) in the market. But introducing maintenance covenants and the like into the system might create too much of a burden on lenders in terms of monitoring.

^redacted‌ I agree distribution limit should apply to both the common and the preferred. And there should be simple guardrails in lieu of current none.