The Small Business Administration was established over 60 years ago with the mission to assist Buyers who are interested in becoming the owner of a small business in the United States of America.
The U.S. government recognizes the success of small business owners plays a crucial role in maintaining a stable economy.
An SBA loan is a commercial loan that is guaranteed to be paid back by meeting certain financial requirements.
The Small Business Administration does not directly give loans but instead helps to eliminate the risk to lenders by guaranteeing the loan will be paid back.
SBA Programs for Buyers:
SBA 7(a) Loan Program (Most Popular): Watch This
Export Express Loans from SBA: Watch This
Below are a few loan application requirements when buying an existing business:
Most recent Balance Sheets
Profit and Loss Statements
Asking Price / Cash Flow
Terms of Sale / Contingencies
List of Assets / Equipment
Last 2-3 years Tax Returns
Through the process of applying for an SBA loan the potential buyer must provide personal and financial information to be taken into account for loan approval. Example items would be Buyers net worth, injection amount, and credit history.
The requirements for loan approval vary to compensate for economic changes. Loan amounts, fees, and interest rates are not established until terms of the loan are agreed upon between the borrower and lender. If a Buyer is unable to be SBA approved, there are other ways of attaining the needed financing from a lender; bank and nonbank institutions alike.