Recommendations for SBA 7a Lenders allowing 10% equity

March 19, 2020

by a searcher from University of Southern California in Redwood City, CA, USA

Hey Community of searchers and lenders - We're looking for recommendations for lenders who can lend SBA 7a loans covering a 90% loan to value ratio.

We're self funded searchers close to signing an LOI with a company selling for 3-4x at a ~5m purchase price and the LOI doesn't have a seller note included. Clearly given the dip in the stock market has made us less willing to liquidate more of our funds to fund a 80% loan to value ratio and we've done the calculations and the company can support a 90% loan to value.

Searchers - Can you share any banks which have completed a 90% LTV funding, which seems to be the minimum threshold for SBA given the requirement for the new owners to bring 10% equity? Super appreciative for any and all recommendations

Lenders - Can you please reach out to us redacted if you can confidently underwrite a loan with a 90% LTV that meets all other requirements such as the interest coverage ratios.

Thanks all!

Reply by an intermediary
from Indiana University at Bloomington in Carmel, IN, USA

Live Oak, one of the largest SBA only lenders, is a very good SBA lender with very experienced people. John Randall redacted is a great contact as is Lisa. The SBA, within the next few days, will be waiving all fees if you don't already have your PLP number (usually a few weeks prior to closing) as well as it is being considered to give the banks a 90% guarantee, which should allow them to take a little more risk. So a good time to buy a company and get a loan. Most other banks will do 90% loans but may have more handcuffs on you.

Reply by an intermediary
from Naval Postgraduate School in Bellevue, WA, USA

Call lisa forrest at live oak bank. It is my understanding that 90% coverage is very dependent upon the DSCR calculation as well as the financial capability of the borrower.

+1 more reply.

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