SBA LOAN QUESTION: CAN YOU GET 2 SBA LOANS FOR THE SAME TARGET?
I'm looking at a growing maintenance business with very predictable revenues and long term contracts. The company also has a lot of fixed assets (equipment installed at customer sites) and annual growth Capex requirements.
What I would like to do is created two acquisition entities with each taking out a separate SBA Loan: Entity 1 would own the maintenance business and Entity 2 would own the equipment and lease it to Entity 1.
This entity would acquire the maintenance business from the from the Target excluding fixed assets (mostly equipment installed at customer locations). The company would take out a $3M SBA 7(a) loan for approximately 75% of the purchase price.
This entity would purchase certain fixed assets (equipment installed at customer sites) from the Target and then lease them to Entity 1. Entity 2 would take out a second $3.0M SBA loan for 90% of the asset value. The loan would be fully amortized by lease payments over 5 years. Whenever new growth CAPEX is required, Entity 2 would take out additional SBA loans (once ever 6-12 months)
Entity 1 and 2 would have overlapping ownership. Total of SBA loans would be $6M. Can this structure work?