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Have buyer and no financing

Business (25 yrs old) and newer building (5yrs old) for sale totalling 2.8 mil. Building appraised for 2.4mil and balance of 400k for business and FF&E. Prospect has good credit, assets and $300k downpayment. SBA approved and no banks willing to finance. It seems like banks are no longer in the lending business. Any suggestions on lenders or alternative structuring of the sale?

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Answers (9)
Alexandra Simmer
United Community Bank
Asst. Vice President, Business Banking
Fulton County, GA

I think I can help Mr. Stevens. Call me today!
Alexandra Simmer
Asst. VP Business Banker

Aug 5, 2009
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When you say SBA approved, it may be referencing that it's eligible for SBA financing, which is different from being "approved". If you are having a difficult time, my suggestion is to contact the local SBA district office where the business is located, and ask for lender referrals. The local SBA office will usually have a pulse of what lenders are lending. There are still banks and lenders who are still lending, however, it is contingent upon a number of variables including type of industry, does the buyer have related experience, etc. While the SBA has the same book of rules, every bank or lender is different.

Aug 4, 2009
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Diamond Financial
Loan Consultants/Broker

We are a Consultant/Brokerage that helps Sellers, Buyers and Brokers connect with lenders that are financing projects currently. If there is adequate Cash Flow in this business, it sounds like a project that should get funded. For straight answers from a firm that has been in business over 10 years, please contact Steve at (888) 238-0952.

Aug 3, 2009
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Jason- As I mentioned in my previous response. I thought the SBA backed (guaranteed) the loan. So, what your saying does confirm this. Even though the SBA was willing to guarantee the loan the banks are not willing to do the loan due to strict requirement in the current lending environment. Some of which are.requests for excessive cash in bank, excessive assets including personal,excellent credit (which the prospect has) excessive industry experience, etc... The bottom line is that lenders are not that aggressive right now. I thought about just selling the business and playing landlord for a couple of years, but my objective was to move to the west coast and spend the last few years with elderly family before they pass. The idea of being 2000 miles away if the buyer defaults doesn't excite me. I will have second postion on the mortgage with a failed business and not enough income to support the mortgage. My only hope would be to sell the realestate before I ran out of resources from the sale of the business. We all know what the realestate market is like. Thanks for the input.

Aug 1, 2009
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Small Business Underwriters

Bob - What do you mean that it's SBA approved? The SBA is not a lender, they just guarantee a portion of the lenders loan (right now its 90%) on tha 7a product.

If financing is not an option, perhaps you can sell the business now, then lease the building for a period of time (until the economy recovers, and the new owner can demonstrate aptitude) like 5 years, with an option to buy.

Aug 1, 2009
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PNC Bank
Vice President, Sr. Relationship Manager
Suffolk County, MA

I am with PNC Bank and as you may know, we are still one of the Institutions lending. However, whenever I have submitted an application, I get hit with a request to have some of the business' asset (cash acct, owner's personal acct, etc) brought over to PNC. I have learned quickly that is starting to be the trend by banks lending. Even though it would appear its about getting additional assets to the Bank, its more about having the bank feel comfortable the lender has other assets in case of a default. I will run the scenario by our dept and let you know if I find anything good...

Jul 29, 2009
Gary W. Sharp
Sharp Commercial, LLC

Hello Bob,
As business brokers we are asking the same question - Are banks in the business of lending? Our most recent transactions were difficult but the two banks that seem to be most active are Wells Fargo and perhaps US Bank. The down payment may be a little shy. You may have to carry a second on the real estate to make it work and/or you may see a "goodwill" financing limit provision as well. Good Luck!

Jul 28, 2009
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Doug - haven't done an SBA loan in about 7 years, but I thought the SBA backed the loan for a certain dollar amount and the bank is the actual lender. Which would mean the bank could still not elect to do the loan. If I'm incorrect please advise.

Jul 27, 2009
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

Bob, it appears that you have, a qualified buyer, one of most key ingredients of a successful sale. The fact that your business includes real estate should amplify your chances of getting it financed provided your business has good financials and your buyer has industry experience. But based on what you have posted, your chances of getting it financed should still be good. I am curious about your comment about SBA approved. Seems to me that whoever SBA approved it should be willing to finance the deal. What am I missing?

Jul 24, 2009