SBA Surbordination - Does it ever happen?

searcher profile

March 30, 2023

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Lowell, MA, USA

All - portfolio company of mine received an SBA EIDL loan and is subsequently looking to close a loan with a commercial lender who is asking for a first position on all assets. Does anyone have experience getting the SBA to subordinate their loan?

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Jonathan - great question. If it is a purchase you are doing, the SBA requires any existing EIDL loans to be paid off at time of closing on the purchase. However, if you are looking for other debt on a company you already own, then there is a process for requesting a subordination. If you send me an email at redacted I can get you the form and breakdown of the paperwork required. Good luck.
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Reply by a lender
from University of Missouri in St. Louis, MO, USA
EIDL loans can be subordinated but I don't know about if they will for an acquisition. Bigger question, why would you keep the EIDL loan when the seller received all the benefit?
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