SBA+conventional clarification

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from Duke University - The Fuqua School of Business
in Denver, CO, USA

1yr ago

SBA+conventional clarification

I have a few gray areas in some of my notes that I'm hoping to get cleared up.

Let's say you need to borrow $7M and an SBA qualified lender that offers an SBA + Conventional option.
1/ If the SBA rate on the initial $5M is 10%, what would the ballpark conventional rate be on the $2M? How much higher should I pencil in?
2/ With the SBA on a 10-year amortization, is the Conventional portion, the $2M in this example, also on a 10-year amortization or is it typically 7?
3/ If they are pari passu, and assuming the Conventional rate is higher, am I able to paydown the Conventional first (with any cash flow after required interest/principal payments)?

0 Likes

65 Views

reply by a lender 1yr ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Great questions. I will answer below:

The Bank portion of the loan cannot exceed the interest rate on the SBA portion of the loan. The Bank cannot give themselves preferential treatment on their loan.

The amortization on the Bank loan must match the amortization on the SBA loan of 10 years. However, the term can be shorter. So you could have a two-year balloon note with a 10-year amortization.

Technically it would depend on the lender, but usually the lenders encourage you to pay down the Bank note sooner as that is the higher risk note for the Bank.

Please keep in mind Pari Passu loans are not easy to get done. I see a lot of people advertise them, but a very small percentage of them get done due to the higher risk they represent for the Bank. The deal has to be solid all the way around and relatively low risk, and often times the lenders want strong Guarantor support and some collateral. The underwriting criteria the Banks use is also much higher, usually minimum DSCR of 1.50x to 2.00x depending on the lender. I see a lot of people on stretch deals trying to get Pari Passu done when it is just not possible.

I am always happy to discuss or review any opportunities. You can reach me here or directly at redacted

reply by a lender 1yr ago
from University of Southern California in Los Angeles, CA, USA

Brad has provided a great explanation of the nuances between SBA and conventional loans. If you're considering SBA financing for your acquisition, we'd love to help. We work with 30+ active SBA lenders, and our service is free for you since the bank pays us after your loan closes. Feel free to reach out to me here or directly at redacted You can also schedule a meeting with me at redacted. Looking forward to chatting!