SBA 7A Loans: The Questions Everyone is Asking

In a recent interview with Heather Endresen, a seasoned SBA Lender, a range of pertinent topics were discussed. 1. M&A Strategies: Discussing the importance of patience and strategy when merging and acquiring businesses, and methods to identify the right business to purchase. 2. SBA Regulations 2023: An overview of the new regulations introduced by the Small Business Administration (SBA) in 2023. 3. Personal Guarantees: Exploring the reasons behind the necessity of personal guarantees in SBA transactions. 4. SBA Seller"s Guarantee: Delving into the implications and mechanisms of a seller retaining a 20% personal guarantee. 5. Seller"s Contribution: The significance and mechanics of a seller"s contribution towards the down payment. 6. Seller Note Insights: Understanding the structure and conditions of a seller note in SBA transactions. 7. SBA Standby Agreements: A deep dive into how SBA perceives standby agreements. 8. SBA Lender Guardrails* Emphasizing the protective measures in place to prevent overbidding and ensuring the financial feasibility of acquisitions. 9. Sellers, CIMS, and SDE: Understanding the correlation between sellers, Cashflow Information Memorandum (CIMS), and Seller"s Discretionary Earnings (SDE). 10. Due Diligence Firms: Highlighting the role and importance of companies that conduct thorough evaluations before business transactions. 11. SBA Down Payments: A detailed look at the down payment requirements set by the SBA. 12. Investment Returns: Discussing investors" expectations of a 30% Internal Rate of Return and its relation to down payments. 13. SBA Ownership Transition: Procedures and requirements for changing business ownership under SBA guidelines. 14. Refinancing with the SBA: Exploring opportunities to refinance for better interest rates through the SBA. 15. SBA Investment Thesis: Discussing how the SBA evaluates M&A borrowers, the compatibility of real estate investments, and more. 16. Debt Service Coverage: Understanding the SBA"s requirements concerning the Debt Service Coverage ratio. 17. SBA"s New Credit Evaluations: A look at the SBA"s new criteria for evaluating applicants based on credit reports, cash flow, and equity or collateral. 18. SBA Pre-Approval: The efficacy getting pre-approved by the SBA. 19. SDE Challenges with SBA: Addressing common issues related to Seller"s Discretionary Earnings in SBA transactions.