SBA and Seller Financing Trends [Navigating Business Acquisitions]

SBA and Seller Financing Trends [Navigating Business Acquisitions]

- Small business acquisition space is currently active, but many deals lack sufficient cash flow for traditional financing.
- To address this, sellers are increasingly open to carrying a second seller financing component on full standby for up to two years.
- This seller carryback helps remove a substantial portion of the loan amount from the debt service ratio (DSR) calculation, making deals more feasible.
- Buyers are willing to pay a premium for such deals because they see the potential beyond the DSR metrics.
- Interest rates on these loans, often not fixed, can be high (up to 11%), further driving the need for seller carryback financing, making it an attractive time for buyers using SBA financing with limited equity injection.

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Timestamps:
(00:01) Introduction to small business acquisition trends.
(00:51) Exploring seller carryback arrangements with a focus on the two-year full standby rule.
(01:20) The challenge of justifying cash flow due to add-back expenses and the willingness of buyers to pay a premium based on potential.
(02:00) The importance of seller carryback financing in making deals work and an example of such a deal.
(02:26) The impact of interest rates on loans, particularly for acquisitions without real estate.
(03:10) The advantages of using SBA financing and structuring deals with low equity injection.

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#sbafinancing #SellerFinancing #businessopportunity #FinancialFreedom #FranUniversity #shorts

About Beau: Beau Eckstein is a franchise consultant, commercial mortgage advisor, and business ownership coach who helps entrepreneurs buy, build, and expand their businesses. He assists aspiring entrepreneurs in finding their ideal franchise or business opportunity. Beau's expertise as an investor and business owner allows him to guide clients through the entire process of acquiring, funding, and growing their ventures.

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