Several SBA loan questions below. If someone might be able to answer, I'd be very grateful.

  1. 1) If I use let's say $4mm of SBA debt to fund my acquisition, how long / burdensome is the process to get funded an additional $1mm SBA loan tranche to do a tuck-in acquisition?

  2. 2) If I max out SBA debt on the initial acquisition at $5 million, if I want to do tuck=in acquisitions, then: 2a) Do I need to refi out the SBA debt with a larger conventional loan or can I just take on unlimited incremental conventional debt behind the SBA loan? Are there any constraints I should be aware of? 2b) What is the typical rate on what I assume is a second lien conventional loan behind the SBA loan? 2c) Can you raise the conventional loan from lenders other than your SBA lender for this? 2d) Are there any SBA lenders that are particularly well suited for this situation (one stop shop as you scale)? 2e) If I'm doing a tuck-in a few weeks after the initial acquisition, I assume the minimum equity requirement only applies to the first acquisition correct? The tuck-in can be 100% debt financed even if it closes just a few weeks later?

    3) In practice, assuming you have a sufficient DSCR and are buying cheaply enough, are most SBA lenders OK with 5% down by combining sellers note and SBA loan, or is this only technically possible but not typically something SBA lenders would underwrite?

  3. 4) When you use a lending brokerage like Viso, do the fees they charge the lender get passed through to the customer economically through let's say higher fees? Or is it genuinely no cost to the searcher?

  4. 5) What are typical financing fees all in for an SBA loan? I have heard of people with pretty sizable fees at close but the guaranty fee seems small from my research. What other fees exist and how much?

  5. 6) If I have a seller note that PIKs at 7%, does the non-cash PIK interest get included in DSCR or is it strictly cash interest that is incorporated?

  6. 7) I understand that the amort schedule for SBA loans is such that you should have equal payments over the life of the loan if the interest rate were flat (vs TLBs that just take 1% amort off the initial balance), with more principal in the early periods and less principal later. When the variable rate flexes up and down, does the principal payment schedule stay flat while the interest fluctuates, or does the amortization schedule get reset? If you do an add-on to your existing SBA loan, I assume you create an amort schedule for that tranche that aligns to the initial loan's maturity?

  7. 8) I understand in many cases, EBITDA declines in the first year as the operator is getting a handle on the business and may need to invest in G&A, and they're often able to grow back within a year or two. In the event of an EBITDA decline like this, how difficult is it to still execute on a tuck-in acquisition strategy and secure an incremental loan during this period, assuming PF DSCR will still be###-###-#### 5x, particularly where the tuck-in is actually boosting PF DSCR vs without the tuck-in?

    9) Do the low default/bankruptcy rates cited by many exclude or include Offer in Compromise situations?

    10) Are there any covenants in the credit agreement that limit your ability to raise management salaries?

    11) Is 45% a market tax rate assumption for allowable tax distributions?

    13) What are typical friction costs from refinancing SBA debt with conventional?