SBA new rules questions for $1.8m acquisition - ($400k downpayment available)
Hey guys,
So here's my situation. I (a permanent resident) am interested in acquiring a business along with my father in law (a U.S Citizen). It is listed for $1.8m, and we have around $400k available for a downpayment.
Since the new SBA rules have made permanent residents non-eligible, my father in law has to be the only person allowed to be on the loan.
This presents 2 problems, downpayment is shared between us (75% by me 25% by him). Workaround: I can gift him the funds, with a no payback obligation?
Second problem: The SBA requires him to be the primary operator of the business (which is out of state). He is elderly and wants to only look after the bigger picture stuff while leaving daily operations to me. Workaround: I coulf be hired as a "key employee" and a salary designated for me?
The business has strong cashflow and with a 20-25% downpayment it would have a DSCR above 2. We can potentially ask the seller to also hold a 10% note.
I know that the SBA is unlikely to approve this structure. Are there any other conventional loan programs we could utilize instead?