What terms possible for contribution to a downpayment for SBA type loans - scenarios

by a searcher

2 years ago

I am in discussion with a couple of people and also proposing to a few operators a possible contribution to the downpayment. I am not approved for SBA loan so I think partnering with someone will be better. Target range of a deal is up to 1.5 million EBITDA.

 if I offer cash towards Down payment of SBA approved searcher or anyone acquiring a mall and lower mid market 1-5 million range). what terms should I expect.  I m am sure there may be various ways to structure a deal for my contribution to down payment.

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investor from University of California, Berkeley - Haas School of Business

Market is ~ 3x model return over 5 years with reasonably conservative assumptions. Structure is typically participating preferred stock. So, depending on the company's financial profile, purchase price paid and terms of the preferred stock, you can backward-solve what your ownership percentage should look like. Most banks will also limit investors to ~ 17-18% ownership to clearly stay below the personal guarantee threshold. Ping me if you want to discuss more.

2 years ago | like reply | 1 like

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