Financing Pre-Qualification

Note: This applies only to businesses priced at less than $5 million.

During the financing pre-qualification, we submit your company for pre-approval to an SBA lending professional. If pre-approved, we include this fact in the advertisements and in the CIM.

  • Definition: An SBA loan is a small business loan guaranteed by the Small Business Administration. An SBA loan typically requires a 10% to 20% down payment, and the balance is usually amortized over 10 years. The maximum loan amount is currently $5 million.
  • Prerequisite: The required documents listed below (tax returns, W2s, etc.) are needed before we can submit your business for pre-approval for SBA financing.
  • Required Documents: Two to three years’ federal income tax returns and W2s are required to pre-approve your business for bank financing.

Hierarchy of Financing Options

Note: This applies only to businesses priced at less than $5 million.

  • If your business is pre-approved for SBA financing, you do not need to offer seller financing.
  • If your business is not approved for SBA financing, offer seller financing.
  • If you do not want to offer seller financing, you can also ask for all cash, but prepare to give a 20% to 30% discount on the purchase price.

In summary, buyers have three major sources of funds: bank financing, seller financing, or the buyer’s retirement funds.

  • We recommend first pre-approving your business for SBA financing. If SBA financing is available, there is no need to offer seller financing.
  • If SBA financing is not available, you must offer seller financing or ask for all cash and discount the price by 20% to 30%.

Click here for additional information regarding Bank and SBA Financing.

Following is additional information regarding financing options for buyers of small businesses: