Frequently Asked Questions
Does the business you are trying to acquire have to be a U.S. Based business to qualify for financing?
Yes. The business must be domiciled in the U.S. and file U.S. tax returns to qualify for SBA financing.
Do I have to be a U.S. Citizen to qualify for SBA financing?
You must be either a U.S. Citizen or a Permanent Resident Alien to qualify for financing.
How much of an injection (down payment) is required for an SBA loan?
10% is the minimum allowed by SBA. The required amount can be higher, depending on the purchase price and cash flow of the business.
Can inventory and working capital be included into the loan?
Yes. Your loan can be comprised of the cost of the business acquisition, the inventory currently on hand and new inventory, working capital and all closing costs.
Can I use my home equity loan for the injection (down payment) of an eCommerce acquisition?
Yes, as long as you have outside income to service the payment.
Do you provide pre-qualifications so that I know I qualify for an ecommerce acquisition?
Yes. I provide pre-qualifications, which comprises of an over-the-phone consultation and completion of two simple forms. It not only helps guide you on what size of purchase you qualify for but will put you above all other prospective buyers when placing an offer on a business.
As I look at businesses to buy, how do I know it qualifies for SBA financing?
Sometimes listings by various brokerage firms will advertise that the business is “SBA qualified.” If they do not, simply provide us with the financials and listing memorandum of that business so we can help make that determination.
Do you finance SAAS/Affiliate Marketing on-line businesses or just product-based?
SAAS/Affiliate Marketing businesses are eligible for SBA financing under the same terms as product-based businesses.
Does a buyer have to personal guarantee the loan?
Yes. In all cases.
Do I purchase an on-line business as an individual or as an entity?
Since an SBA loan is a business loan, buyers will typically form a new business entity that will be the purchasing entity of the transaction. They may also use an already existing business entity to be the purchasing entity.
How long does the loan process take?
On average, between 45-60 days, depending on numerous variables, including the responsiveness of the buyer during the loan process.
Do I have to purchase 100% of the business that I am trying to acquire?
Yes. It is an SBA requirement.
Can I have a contractual agreement to keep the current owner on as an employee?
Under SBA guidelines, it is permissible for them to stay on for no more than 12 months.
What is the maximum loan amount through SBA financing?
$5,000,000. It can be comprised of one or multiple loans.
Is there any other online business acquisition financing available other than SBA financing?
Due to the nature of online business acquisitions and their lack of collateral, SBA financing is the only financing available.
Is it required that a buyer has direct ecommerce business experience to qualify for an acquisition of an ecommerce business?
Typically not, as long the buyer has the right business skillset to successfully run a business. I do look for direct experience on acquisitions above about $2,000,000.