Recent updates to the SBA have created new pathways for successfully financing a buyout and subsequently operating the business. All change comes with nuance, and as the details of these updates are better understood, more lenders are likely to adapt them. The most significant changes are relevant to partial buyouts: historically, the SBA financed buyers who were interested in acquiring all of the business. Now, lenders can fund agreements to simply buy a percentage of that same business.
Additionally, the seller can maintain an ongoing and long-term relationship with the business as opposed to the precedent of a 1 year limit for sellers who wished to remain active as a consultant. For businesses engaging in specialty services or businesses that require licensing to operate, this change is an exciting opportunity to transition with ease AND appease sellers who are still interested in involvement.
Interested in buying with 0% down? Businesses with favorable debt to worth ratios are eligible for financing 100% of the transaction without the previous requirement of an equity injection. As these promising changes continue to be adapted by lenders around the US, we can expect small businesses to continue to flourish and for entrepreneurs to be in a better position to actualize their goals.
I expand on this further in my 21 Hats column today. Click here to read.
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