I'm looking at a very asset heavy business. The broker is proposing to sell at:

$1.5M for the business portion to be financed by SBA loan
$1.7M for the assets, which Seller will finance for a down payment of 10-15% for 10 years
$800K for real estate, which Seller will finance for a down payment of 10-15% for 10 years

The $1.7M on the assets is not equal to the depreciated book value of the assets, but are what he's calling "market value" which there's no way to know pre-LOI. The business cash flows $1M a year, and so I think all-in it's a fair deal at $3.2M total, but the pricing structure is something I've never seen.

WIll SBA bankers typically allow such a huge sellers' note on the fixed assets in such a fashion? I would think they would not like having the assets (collateral) separated out like that and would only allow a note on the goodwill portion of the deal. I assume they would also want the Seller note to be on stand-by for a few years, correct?

I guess I ought to just ask my banker directly, but wanted to see if anyone here has any thoughts on the above ideas.