SBA Lending Question RE: Buying a Business & Relocating it

searcher profile

January 23, 2024

by a searcher from New York University in Cranford, NJ, USA

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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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
It really depends on the type of business you are buying. If it is a business where the location plays a vital role in operations, you need to be close for your employees, or you really need the current facility to operate out of, it might be hard to convince a lender the business can be moved. However, if the facility is not key to operations and there is no concern over losing key employees with a move, then it is possible to set the business up to be moved.

Please keep in mind that as a rule the SBA wants to see a long-term lease with options for up to 10 years signed at closing for acquisitions. The SBA wants to be sure the Borrower has the space they need to operate. We have gotten around this when the space is not as important a concern for the business, but it is something else that would need to be addressed.

I am more than happy to have a further conversation at any time at redacted Good luck.
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Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
+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,
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