6 Months Of Payments Covered By The SBA
For new SBA-backed 7a loans (the loans used for business acquisitions) made after March 27, 2020 and fully disbursed prior to September 27, 2020, the SBA will begin making payments with the first payment due on the loan and will make six monthly payments. The SBA will pay these payments directly to the lender, and the borrower will not be responsible for the payments until after the first 6 months. This is an incentive offered as part of the federal government’s CARES Act, and could really help a new business owner. This is an amazing opportunity to use the funds you would have paid towards the loan by investing it back into the business. This would be the chance to really take it to the next level as soon as you take the reins.
Get Under Contract With A Business Now
The average time it takes to close a business sale transaction which includes an SBA loan is 2-3 months. So, for any buyers thinking about making an offer on a business to take advantage of this perk, you need to get under contract ASAP, in order to ensure that your loan is funded by September 27, 2020. So it’s literally “last call” right now for buyers to get in and get 6 months of loan payments paid by the SBA.
What Lenders Are Looking For
Lenders are understandably being very cautious about which business acquisitions they are funding at the moment. So, here’s what we’ve heard from the lenders that we’ve spoken with. First, the business being acquired must be going strong, have enough cash-flow to support the business expenses and the debt repayment, and it cannot be closed or suffering due to our current COVID-19 conditions. Second, the buyer must be solid, with a good down payment, excellent credit, and they would prefer to see that the buyer has experience in the industry of the business they are purchasing or relevant business experience. Each lender is different, and will have their own requirements, so consult your chosen lender to see if a loan will be possible.
For more information about the SBA 7a loan program, head over to the SBA’s website.