SBA Lender requirements

Any company affiliated with the owners in which 20% or more is owned will need to show all things financial about those affiliates. It's SOP policy and doesn't have wiggle room.

SBA SOP requires all bank or nonbank lenders to review other business affiliates owned 20% or greater of ALL proposed new owner(s)/personal guarantor(s) of subject business acquisition loan project. This includes the last 3yrs IRS filed business tax returns of ALL other businesses 20%+ owned, including most recent month-end 2023 YTD P&L and balance sheet. I have seen some bank underwriters case by case ask to see financials of other businesses owned less than 20%. It wouldn't make sense for the government to guarantee a bank change of business ownership loan if the proposed transitioning owner(s) own other affiliates/businesses that are presently losing money, reporting major losses. Yes, the stand alone debt service coverage of the proposed business supporting the SBA loan project debt it a must, however, you can bet every bank will want to see the overall global debt service coverage of all businesses. What is important for business buyers to remember is that the SBA doesn't provide the actual money/loan for the sale transaction. The bank the business buyer is working with provides that actual money/loan and the SBA/government offers the loan guaranty ONLY if the bank followed SBA SOP credit guidelines 100%. Where it becomes most confusing and challenging to navigate for business buyers looking for best bank loan structure to support their change of business ownership loan project is that every bank or non bank lender has their own in-house business underwriting guidelines to follow, on top of the SBA SOP.