Transfer or renew equipment loans?

by a searcher from The University of Texas at Austin - Red McCombs School of Business

2 years ago

If you want to purchase a company in an asset deal, but they have equipment with existing financing at an attractive price, can you structure to keep the financing? Or does it have to be paid off and refinanced after close?

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intermediary from Ryerson University - Ted Rogers School of Management

Coming from a lender's perspective, transferring the existing loans is difficult. It interferes with your acquisition financing structure, the only way I have seen it done before is in a non-SBA financed deal where a buyer went to the seller's existing bank and took out the acquisition loan alongside the existing financing which was refinanced. It saved the vendor some prepayment penalties but the process was long. Probably not the best fit for you.

2 years ago | like reply | 1 like

intermediary from The University of Chicago - Booth School of Business

If you are planning to use SBA, I doubt you can carve out such equipment financing. Also, double-check if existing loan is really attractive. Interest rate on existing financing may be attractive, but P+I may not be.

2 years ago | like reply | 1 like

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