SBA Loans and Mortgages
March 12, 2024
by a searcher in Boston, MA, USA
Hi All -
I am currently a W2 employee, renting an apartment and own no real estate. I hope to acquire a business (with SBA 7a) in the next few years. Upon acquisition, I'd ideally purchase a home sometime in the following year (in closer vicinity to the business). Two questions:
1. Will having no real estate collateral at the time I apply for the SBA loan make qualifying for one more difficult?
2. Will the SBA loan inhibit my ability to qualify for a mortgage? Let's assume my W2 salary and CEO salary will be equivalent.
Thank you!
in United States
1. Impact of Lack of Real Estate on SBA Loan Qualification: The absence of real estate as collateral does not automatically disqualify you from obtaining an SBA loan. The SBA's guidelines are designed to accommodate applicants who do not own real estate, reflecting an understanding that not all business owners, such as renters, will have this asset. However, it is crucial to recognize that banks and non-bank lenders operate with their internal credit policies, which can be more stringent than SBA guidelines. While some financial institutions are flexible and willing to finance predominantly intangible assets or unsecured loans, others may require more substantial collateral. Identifying the right lender for your specific business acquisition needs is essential. As an expert in SBA loan structuring and acquisition financing, I guide you through this process, ensuring we approach lenders whose criteria align with your situation.
2. SBA Loan and Subsequent Mortgage Qualification: Obtaining an SBA loan should not impede your ability to qualify for a mortgage, provided the business acquired demonstrates robust financial health and you maintain a stable income. Mortgage lenders will review the business's financial statements and tax returns to assess its performance and the reliability of your salary as the business owner. This analysis ensures the company can support your financial obligations, including a home mortgage. Maintaining a healthy business that generates sufficient income, including owner salary, is critical to qualifying for a mortgage post-business acquisition.
As a seasoned consultant specializing in SBA-backed business acquisition financing, I am committed to preparing, packaging, and identifying the most suitable banking or non-banking financial institution for my clients. Thorough preparation and strategic lender selection are the foundations of a successful acquisition.
Please feel free to contact me if you have any further questions or require assistance with your acquisition financing needs. I support your entrepreneurial journey with expert advice and tailored financing solutions. redacted
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
As for qualifying for a home mortgage, it really depends on what your financial position looks like post closing. Lenders are going to want to see enough income flow through to you personally to support a home mortgage. If you are showing losses on the business and not showing much cash flow, it could be hard to qualify for a residential mortgage. Just the fact you have the SBA loan does not impact that but the cash flow the business is throwing off to you personally. So long as you have the personal cash flow to support a home mortgage you should be able to qualify. I hope this helps. Happy to discuss in more detail at any time. You can reach me here or directly at redacted Good luck with your search.