Refinancing a Seller Note with SBA Financing

Many are unaware of the eligibility requirement to refinance a note that was provided by the seller. In order to be eligible, the key requirement is that the note must have been in place and current for at least 24 months following the change of ownership. When the comment means current, it’s referring to payments being made as agreed and not on standby terms.

There are other conditions that must be meet and one is the 10% payment improvement. This means your new installment must be at least 10% less than the existing installment amount in the aggregate. This can be avoided if there is a balloon payment due on the seller note and other reasons.

All this information can be found in the SBA SOP 50 10 6 which came out on October 1, 2020.

Team members at Blue Water Capital Advisors have significant knowledge of SBA’s policies and are always up-to-date with any changes. If you have questions regarding any SBA eligibility topics, feel free to reach out to us. Don’t forget to subscribe to our newsletter!