SBA 7A and Preferred Shares

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October 30, 2020

by a searcher from Thunderbird School of Global Management in St Paul, MN, USA

Does anyone have experience in structuring a deal with a SBA 7a note and preferred shares in order to stay under the 20% PG criteria for investors. Can you share terms you may have provided or rules of thumb to follow. Thanks!

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Reply by a searcher
from Georgia Institute of Technology in Kansas City, MO, USA
On a 7a deal I was a part of, we did not have preferred shares. Instead, we provided a preference on all equity investments. Not a liquidation preference because the preference we strucutured is paid out of available cash flow. The preference boosted the return profile while keeping everyone healthily under the 20% threshold.
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Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
I can share on a direct call with you how we approach from a Sr debt perspective. redacted
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