SBA Authorizes 100% Financing for Employee to Buy Business.
Business owners can now sell their business to an employee with 100% financing.
SBA Employee Business Acquisition Loan
The SBA Employee Business Acquisition Loan is designed to facilitate the purchase of a business by its employees. This loan program offers several unique advantages, making it easier for employees to take over an existing business from their employers. Here’s a comprehensive overview, along with the benefits and qualifications.
The SBA Employee Business Acquisition Loan allows employees to acquire a business with no down payment and minimal credit requirements. This program is structured to provide the necessary funding while ensuring that the business can continue its operations smoothly during the transition period. The loan covers up to 90% of the purchase price, with the seller holding a note for the remaining 10%, which remains on standby for the first 24 months.
Benefits
- Preserve Liquidity: Employees can purchase a business with 0% down, ensuring they don't deplete their personal savings.
- Extended Loan Terms: Enjoy lower payments with loan terms ranging from 10 to 25 years, backed by SBA interest rates.
- Large Loan Amounts: Access loans up to $5 million, suitable for larger acquisitions with simultaneous SBA and conventional bank loans.
- No Minimum Credit Requirement: Employees with varying credit histories can qualify, as there is no minimum credit score required.
- No Requirement for Personal Collateral: The loan does not require personal assets to be used as collateral.
- Flexible Use of Funds: Funds can be used for various purposes, including working capital, inventory, equipment, commercial real estate, renovation, and leasehold improvements.
Qualifications for SBA Commercial Real Estate Loans
- Business Profitability: The business being purchased must be profitable enough to support the repayment of the buyer's SBA loan.
- Transferable Experience: The buyer/employee must have experience relevant to the business they are acquiring.
- Seller's Note: The seller holds a note for 10% of the purchase price, which remains on standby for the first 24 months.
- No Post-Closing Liquidity Requirement: There is no requirement for the buyer to have post-closing liquidity.
- Pre-Qualification Assistance: Spartan’s team provides pre-qualification assessments to determine eligibility before starting the application process.
- Loan Documentation Support: Assistance in preparing and submitting necessary documentation to minimize errors and delays.
This loan program is ideal for employees who are looking to take over a business without the significant upfront costs typically associated with such transactions. By leveraging the benefits and meeting the qualifications, employees can smoothly transition into ownership while preserving their financial stability.