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SBA guaranteed loans are offered by many of the banks that Premier works with. The rules pertaining to these loans are changing, and the terms are becoming more strict for seller
Among the changes:
Seller carry must be equal to the borrowed amount of intangibles. Since business values, especially service businesses, contain a large element of intangible value, this means that the seller will be required to carry much more than they were previously.
For business loans of $350,000 or more, the lender must obtain an independent business valuation from a qualified source.
When home equity is used as a down payment, the borrower will have to show that repayment of the home loan is backed by family income separate from the business.
The original date for implementation of the new rules was May 1, 2008. However, the SBA has delayed this until August 1st, 2008. It’s still unclear how these rules might change again, or what the final outcomes of these guidelines will be. At Premier Business Advisors we are communicating with the banks and the SBA on a regular basis and we are at the forefront of understanding these new rules and how they will affect the sale of your business.
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