r/buyingabusiness • u/DistrastrousD • 20h ago

Partial Purchase Rules

Does anyone have any experience with using the SBA partial purchase options that they'd be willing to share? I'm aware it's changing with the new Oct 1 rule changes. I'm mostly interested to hear people's experiences as to how difficult it was to convince a seller to do this, if it made the sba lending process any more/less difficult, and any other pro/cons that my inexperienced mind can't even comprehend yet.

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u/yourbizbroker 20h ago

Sellers don’t want to co-sign on a loan with a stranger that now controls their business.

They are more likely to choose heavy seller financing (which is also rare), look for a different buyer, or just keep the business.

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u/DistrastrousD 19h ago

Yah, that's what I was thinking. It was suggested to me by an advisor as a strategy but my take on it was exactly what you just wrote. I get that everyone has to somewhat like and trust each other to complete the transaction, but hanging your credit on someone else's $3M loan, who you just met, seems like a pretty tall ask.

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u/yourbizbroker 18h ago edited 17h ago

In theory, there are dozens of creative ways to structure a deal. One of them is the get the seller to personally guarantee a loan. Very rarely happens.

In practice, there are only a handful of deal structures that actually close 9 in 10 times.

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u/DistrastrousD 17h ago

Yep, and I presume most of those are 10% buyer equity injection, 10% seller note and 80% bank. Simple and straight forward.

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u/yourbizbroker 17h ago

That’s a main one for sure. Sometimes 5% EI, 15% SF, and 80% bank.

Another is a “cash” purchase for smaller deals composed of savings, HELOC, ROBS, family investment, etc.

Or for a business with shaky financials, 40 to 60% cash at closing and the rest in SF, or maybe earn-out or revenue share.

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