Pref Divs/ Ordinary Divs - before SBA loan repayment

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by a searcher from University College Cork
in Houston, TX, USA

3yrs ago

Pref Divs/ Ordinary Divs - before SBA loan repayment

Quick question re terms of SBA loans.
Assume you have some investors coming in to provide some equity capital - structured as preferred and then ordinary. Are you able to pay out dividends from FCF (after debt repayments that period) to the investors before the SBA loan is paid in full? Assuming of course that all other covenants and DSC ratios are satisfied?

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reply by a searcher 3yrs ago
from Southern Methodist University in Dallas, TX, USA

Yes, SBA loans are covenant lite, so long as your paying the loan - remaining FCF is yours to distribute or reinvest. There are some covenants around sellers notes and how they subordinate to the primary note but again if you are paying your SBA loan there’s typically very few restrictions

reply by a lender 3yrs ago
from California State University, Sacramento in Seattle, WA, USA

Marcus, DM for a copy of our equity worksheet that helps you work the math on common/pref structures with minority owner equity investors in your cap table to ensure all SBA guidelines are met. Distro can be made assuming you're current on your SBA loan payments. redacted