SBA Lenders to Lead April 26 Panel
Bob Smith of HealthMarkets.com will be the breakfast sponsor.
The Georgia Association of Business Brokers (GABB) maintains a website that lists hundreds of businesses and franchises for sale throughout Georgia in a variety of fields, including automotive, business services, child care, cleaning, construction, electronics equipment, fitness, flooring, floral, food, gas stations, landscaping, manufacturing, medical, shipping, restaurants, retail, security, signs, and businesses related to the internet.
According to GABB President Greg DeFoor, selling a business is a complicated process with multiple steps and a lot of moving pieces. “Our broker members are licensed business brokers, whereas everyone in the industry may not be properly licensed,” said DeFoor, who owns DeFoor Business Services, Inc. “GABB members benefit from continuing education, networking, promotion of professionalism and ethics in the industry, research tools, and forms prepared by a team of attorneys specifically for our association.”
“We are the go-to organization for business sales and acquisitions as a result of our dedication to the profession and our members being among the best in the state at what we do,” said DeFoor. “Our members have represented probably over a thousand transactions, and we have a dedicated membership of business brokers, lenders, attorneys and other professionals to assist business buyers and sellers at every step of the process. We work behind the scenes and go mostly unnoticed, but we’re an integral part of Georgia’s business community.”
For more information about GABB, email georgiabusinessbrokers@gmail.com or call 404-374-3990.
Meeting dates for 2016 are planned for June 28, July 26, Aug. 30, Sept. 27, Oct. 25, and Nov. 29, with a May 17 conference.
Four Questions about Business Valuation & SBA Funding
By Kim Eells, Vice President, The Brand Bank & Susan Kite, Vice President, Signature Bank of Georgia
1. When is a Business Valuation Required?
- If the purchase price of the business less the appraised value of real estate/equipment is over $250,000 or your deal is not an arms-length transaction or if the bank requires for comfort; cost is generally $2,500 – $3,000 and takes about 2 weeks.
2. What happens when the appraised value differs from Sales Price?
- An SBA loan cannot finance an amount higher than the business valuation plus appraised value of real estate/equipment. The Sales price could be negotiated and lowered. Or if Buyer wants to pay the higher amount, it is a lender call but any amount above the valuation must be justified by Buyer. It cannot be part of the loan or counted as buyer equity.
3. Will your Seller need to sign a Standby Agreement?
- There are varying degrees of standby: Full (no payments), Partial (interest allowed) and Springing (payments are allowed unless bank instructs Seller to cease taking them – usually when there is a default). The Seller note must be on Full Standby if it is being counted toward Buyer equity. In this case, the payments can usually begin after 2 years- unless the Full Standby is being counted as part of a 25% equity requirement when the value of goodwill and intangibles is over $500,000.
4. How are financing Partner Buy-outs different?
- These transactions are still considered a change of ownership, but are viewed as less risky than a full change of ownership. Professional Business Valuations are required, regardless of sale price or loan size.
CALL US IF YOU NEED A KNOWLEDGEABLE AND EXPERIENCED SBA LENDER THAT WILL WORK HARD TO GET YOUR DEAL CLOSED!
Susan Kite, Vice President, Signature Bank of Georgia, Business Acquisition Loan Specialist, , 770-595-9734
Kim Eells, Vice President, The Brand Bank , Business Acquisition Loan Specialist, 770-853-5625
Read More
Overcoming Five Buyer Objections to SBA Loans
By Susan Kite, Vice President, Signature Bank of Georgia, and
Kim Eells, Vice President, The Brand Bank
I. “This deal costs too much; I can’t get it financed.”
- SBA 7a Loans are guaranteed by the US Government, giving banks a higher comfort level to make a loan they may have denied as a conventional loan. SBA loan terms can be up to 25 years with no balloon. This means that your buyer only pays closing costs once.
II. “SBA Loans have too much paperwork.”
- All commercial loans require both business and personal financial information. SBA loans do have a few additional forms, but most of these just require a signature – and your lender may even help your buyer fill them out!
III. “I don’t have collateral to offer the bank.”
- SBA only requires that all available collateral be taken. Experienced business acquisition lenders understand that these loans have a high amount of goodwill. They look to the SBA guaranty to help offset that risk. There also may be other factors that help offset the risk such as your buyer’s experience, personal liquidity, and strong business cash flow.
IV. “SBA Loans take too long.”
- It may seem to take forever, but most SBA loans only take 6 to 8 weeks from term sheet acceptance to closing. An experienced lender will help you move things along.
V. “I tried to get an SBA loan, but the bank I went to said no.”
- While this could signal the end of your deal – all banks have a slightly different appetite for different types of loans. Suggest that your buyer not stop there. In fact, GABB’s Business Acquisition Lenders have a network of contacts. We can usually find someone interested in doing your deal!
Call us if you need a knowledgeable and experienced SBA lender who will work hard to get your deal closed.
By Susan Kite, Vice President, Signature Bank of Georgia, Business Acquisition Loan Specialist, 770-595-9734
and
Kim Eells, Vice President, The Brand Bank, Business Acquisition Loan Specialist, 770-853-5625
Read MoreA Broker’s Guide to Getting an SBA Loan Approved
By Cheryl Beer, SVP/SBA Lender, Sandy Springs, Cornerstone Bank
- Provide three years’ returns
- Pre-approval of business financials
- Subject to buyer’s credit, management experience, outside income, collateral
- Minimum 650 credit score
- Management experience or strong franchise
- 1.2X Debt Service Coverage “DSC” (including all affiliates)
- If goodwill > $500,000, equity = 25%. In order for seller financing to be considered equity, full standby for two years (no P+I payments)
- What are reasonable add backs?
- Does business need a line of credit (Capline)?
- Does business do any international trade? 90% guaranty
- Does the deal make sense?
Cheryl Beer –SVP/SBA Lender, Sandy Springs
A 6344 Roswell Rd Sandy Springs 30328 C 678.576.9392
P 678.553.9421 | F 678.553.3551 | E cbeer@cornerstonebankga.com