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> and we received pre-qualification for an SBA loan What does this mean? How does this work? Shouldn't the buyer take out the loan? Or does it look something l
by ativzzz 2y ago
> and we received pre-qualification for an SBA loan
What does this mean? How does this work? Shouldn't the buyer take out the loan? Or does it look something like
- tinypilot takes out 600k, which you pocket
- you transfer ownership
- tinypilot is in debt, not the buyer
?
- mtlynch 2y agoThanks for reading! Yes, you're correct. The buyer takes out the loan. This was an asset sale, so assets transferred over but not any debts. The seller (me) can approach a loan broker and show their financials, and the loan broker can say, "I think it's likely that the SBA would approve this loan, and I can connect you with lenders I think would offer the SBA loan for acquiring this business." The SBA pre-qualification isn't binding or official, but I guess the loan broker's prediction is accurate enough that the brokerage will list businesses as SBA pre-qualified based on the loan broker's assessment.
- ativzzz 2y agoAh I see, it just makes it easier for potential buyers to get a loan. Thanks for the response and the cool blog!