SBA and Goodwill

As of April 1, of this year the SBA has now limited the amount of goodwill that can be financed to a maximum of $250,000 or 50% of the purchase price which ever is less.  The reason for this drastic move is that many of the deals that went bad last year were for businesses that were mostly goodwill and not hard assets.

I believe that there should be a cap on goodwill but I personally believe that $250,000 is too low.  I would be much more in favor of a $500,000 cap and a requirement that a seller has to carry back a minimum % of the purchase price.  By insisting that the seller carry back a  portion of the purchase price we are guaranteeing that the seller will be there to help the new owner succeed.  Why, because the seller has skin let in the game.

There are specific rules to asking for an exception to be able to request greater than the $250,000 cap, and those requirements will be the topic of my next post.

For more on SBA Loan  visit our site Lightning Commercial Funding at www.loanforbiz.com