SBA eligibility if actively running business remote?

June 01, 2022

by a searcher from Texas A&M University in San Antonio, TX, USA

Good Morning,
It is my understanding that the SBA will not loan to an absentee buyer. I am looking at a company in Dallas and I am in San Antonio. This a small manufacturing business that has a staff and manager in place. I do not plan on being absentee, but would plan on staying in San Antonio and lead the business "remote" and visiting a couple of times a month. There would not be immediate plans to relocate the manufacturing facility to San Antonio, but that could happen in the future.

I'm just looking for opinions on whether I would be facing an issue with SBA eligibility due to not being physically there.

Thanks
Clayton

Reply by a lender
from California State University, Sacramento in Seattle, WA, USA

Echoing and adding to Brad's comments above. Especially for first time buyers and in a complicated industry such as manufacturing, and especially in the early months (years) of transition having dedicated on-site owner operator management is the easiest answer. Lots of nuance in your post I'm sure. redacted if you'd like to talk in detail. Austin to Dallas might be ok? From Tennessee to Idaho maybe not so much? And I think Lenders are going to be most sensitive for first time buyers.

We authored an article on transition from Searcher to CEO which dives into all the transition issues searchers should consider. I'm happy to send a copy to anyone that would like it. DM on that, too. :)

Reply by a searcher
from Georgetown University in Bettendorf, IA, USA

couple of comments I could make here but the bottom line is any business you can buy at the SBA level wouldn't have the infrastructure to support the type of off-site management you are suggesting. You are going to sign an unconditional guarantee for a business you won't spend most of your time at? If it's manufacturing, hard to know what's ACTUALLY going on there if you're not present.

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