SBA Lending Question RE: Buying a Business & Relocating it

by a searcher from New York University

6 months ago

My partner and I are self-funded searchers looking for deals in New Jersey with an approx SDE of about 1.5m.  We are in Monmouth and Union counties and are looking to acquire a business anywhere between or within a reasonable distance of those or any of the surrounding counties.  This has been proving quite difficult and deal flow is light, so it was suggested to us to open up to relocatable business options.  We are open to this, but are wondering if this would create a further complication with obtaining a loan from the SBA and would love to hear from anyone who has navigated something like this and/or has any thoughts or feedback they are willing to share.  

Thanks so much in advance!

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lender from Mississippi State University

Chad- that rule is still in place with respect to 504 loans but there are of course ways to mitigate the issue and still do a 504 with a relocation- but the CDC has to address.

I agree with Brad as well but the thing I would also note is- it would be important to determine where your customer base is. If most of the customers are close to the current location it might not make as much sense to relocate it. Sort of depends on the type of business and what product or service you are selling.

6 months ago | like reply | 0 likes

lender from California State University, Sacramento - College of Business Administration

+1 to Brad. Make sure that the employees and customers aren't impacted by your move. If the business isn't location dependent, this might be acceptable. You'll need to research lease space in your target area (assuming it's a business that requires a physical location or office space) and be ready to discuss lease rates going forward for DSC purposes. You'd need to discuss with the seller if you're not going to assume the seller's lease, what happens there? I've certainly been involved with moving locations as part of the acquisition process....give yourself time to think about all the nuances,

6 months ago | like reply | 1 like

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