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Read these
informative articles from our unique
SMART BUYER PROGRAM©
A Seller's Dictionary of Restaurant Brokerage Terms
How Much Is a Restaurant Worth?
Restaurant Lease Considerations
The Impact of Liquor Licenses on Restaurant Business Sales
Useful Websites
Local SBA Lenders and Loan Brokers
SBA Loan Cheat Sheet
Essential Ingredients for Restaurant Business Valuations
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ELIGIBLE USES
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Business acquisitions |
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Real Estate |
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Loan Fees |
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Machinery & Equipment |
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Working Capital |
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Legal Fees/Closing Costs |
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Franchise Fees |
LOAN CHARACTERISTICS
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Typically variable rate loan |
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Fully amortized |
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No pre-payment penalty if term less than 15 years |
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Up to $2 million |
TYPICAL REQUIREMENTS
Down payment:
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20% for business acquisition |
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10% for real estate (typically portion of down payment may be seller carry) |
Term:
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10 years business acquisition |
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25 years real estate |
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Combination uses a weighted average |
Collateral:
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First security interest in assets being purchased |
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Does not need to be fully collateralized, however, any available assets of borrower must be taken up to full collateralization. |
Management
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Direct management in similar industry or transferable management skills |
Rate
Cash Flow
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Typically need 2-year average with consistent interim statements |
Credit
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Anything we need to know? |
Personal Guarantees
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Of all 20% or more owners |
Life Insurance / Landlord Subordination
POSSIBLE DELAYS
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Life insurance |
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Non U.S. Citizen |
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Presently under indictment, on parole or probation |
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Charged with and/or arrested or convicted of any criminal offense other than minor motor vehicle violation |
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Over the next several months verifying 2000 tax returns if relying on those numbers |
RECENT CHANGES
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Guarantee increased from $750,000 to $1,000,000 |
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Prepayment penalties 5%, 3% and 1%. Apply only to voluntary prepayments of 25% or more on loans with maturities of 15 years or longer. |
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Fees: |
2.0% on guaranteed portion up to $150,000
3.0% on guaranteed portion for $150,000 to $700,000
3.5% on guaranteed portion for $700,000 to $1,000,000
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Gross loan amount capped at $2,000,000 |
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Obtain an appraisal if the business has been transferred in past 36 months
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Document valuation of business |
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Verify tax returns from the business |
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