Partial buyouts not supported by SBA?

searcher profile

July 30, 2020

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Los Angeles, CA, USA

Does the SBA program not allow partial buyouts of businesses? Interested in buying out one partner, and the other one would like to stay on. Currently they are 50/50 owners. An SBA banker mentioned that the loan program only allows full equity purchase

2
10
157
Replies
10
commentor profile
Reply by an intermediary
from The University of Chicago in Chicago, IL, USA
I had a similar situation. SBA does allow partial buyout as long as no new owner is involved. So if there 3 shareholders, 1 can buy out the other 2, or 2 can buyout the third. I had 2 owners 50/50, We tried getting a new investor to buy 50% but SBA said no. At the end, one shareholder bought out the 50% of the other one using SBA.
commentor profile
Reply by a searcher
from Babson College in Raleigh, NC, USA
Could you perhaps structure it with the partner that wants to stay on acquiring the other partners' share, while you provide the equity for a percentage? I believe SBA would allow it if the existing partner is the one buying out the other partner.
commentor profile
+8 more replies.
Join the discussion