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I was in a bank recently taking care of something and I asked a business broker about SBA loans. He mentioned that SBA would likely require 50% down . He used the example of a subway franchise. 50% down seems pretty insane ..especially for something like a franchise business.
I am considering purchasing an existing business.
Has anyone here gotten an SBA loan before? What kind of down payment did you put down and what did the SBA look for? Did you have an existing business? Where you starting a new business or did you purchase an existing one?
What was the process like?
If SBA often requires 50% down then it's probably better just to try and get owner financing from the seller I would think.
Is it better to try and get a business loan from a non nationwide type bank?
I know that for real estate loans many investors recommend going with smaller banks rather than the big ones like Chase, Wells Fargo, Bank of America ,etc.
I can't add much, except I did look into getting a loan for commercial property (not a business) 3 years ago. Best deal I found from a bank was 50% down and 6.5% interest. This was when home loans were ~3%, and the bank was *paying* ~0%. The economy wasn't that bad here either, and the price was about 75% of it's assessed value. I definitely had a WTF moment.
It's interesting to hear that it is still so hard to get loans. I'd look into other options.
There is no set standard for the amount of "down payment" for an SBA 7(a) loan. 10% is the minimum, but it will depend entirely on your business plan, current revenues and earnings (if an existing business, etc.). The bank makes the loan, the SBA provides a loan guarantee to the bank. I'd say you need to talk to another banker, preferably one who is very active with making SBA loans.
Seems generous, considering the commonly cited failure rates of new franchises.
Exactly, youre covering for the losses of all the failed businesses in the banks portfolio...
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