Hey all,
I've read the HBR guide on searching. The section about SBA repayment left me unresolved on SBA repayment. I understand there are benefits to fully paying off senior debt quickly in order to limit interest expenses. With that said, is it a requirement or universal standard to do so for SBA loans?
I want to understand if a business is meeting it's monthly payments, can it begin to make payments to subordinate lenders and equity holders while the loan balance remains outstanding to the SBA.
Thanks!
Repay SBA loan fully before dividends?
by a searcher from University of Michigan - Ann Arbor
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If these payments to investors or sub debt are stated as required in your operating agreement vs unspecified discretionary distro down the road, then your sba lender will likely have to consider those payments as debt in the cash flow analysis.
As long as you meet your 10% minimum injection requirements, then any SELLER NOTE debt can be paid subject to adequate dsc.
Your question is very involved and there’s more to discuss. Happy to discuss 1 : 1 to get all the details.
Also attend weekly office hours where Heather Endresen and I get into these type of details. DM for links to register.