Simplifying Small Business Administration (SBA) Loans…is it possible?

How much time and patience do you have?  
If you have both, you could save yourself some money. 

 If the business qualifies and the buyer meets the criteria, the buyer could put down as little as 10%. Commercial loans with banks are requiring minimum of 25% down. That’s a substantial savings. But the process from first contact with SBA to closing could be 6 months. For those who know they have the cash to put down the standard 25%, you can apply for the loan after you’ve ratified a Purchase and Sale Agreement for a property. But for those with less cash to put down, you should discuss with your Realtor, your available cash, a property’s financial performance and therefore understand before you’ve signed a Purchase and Sale Agreement if you are able to qualify for a more expensive property by applying for an SBA loan. But know that the criteria is very rigid and and the business you are looking at must be very strong.

The common loan for purchasing real estate related business is a CDC/504. Visit SBA’s website for a better understanding of this loan and what businesses qualify. The common loan for lodging is the SBA 504 – loan information; there are several forms that have to be included as part of the loan application. For assistance, there are a few SBA Offices in Maine and you can discuss this with your lender. But you’re best prepared if you know ahead of time what the SBA will require and be prepared early.

I’ve been through this with clients. It’s not been easy. But it could make the difference in the property you purchase.