SBA 7(a) Business Acquisition: 5% Equity Injection

Deal Summary

Loan Amount: $1.3M

Equity Injection: 5%

Term: 25 Years

Program: SBA 7(a)

The Situation

A first time business buyer identified a profitable mixed use commercial operation and needed acquisition financing. The buyer had strong industry experience but limited liquid capital, making a conventional down payment structure difficult.

The Challenge

Standard SBA acquisitions require 10% equity injection, and most lenders expect the buyer to bring that in cash. The buyer had relevant experience and solid credit but could only contribute 5% out of pocket.

The Structure

CapitalAx structured a $1,300,000 SBA 7(a) loan with 25-year amortization. A standby seller note covered the gap between the buyer's 5% cash injection and the SBA's equity injection requirements, keeping the deal within SBA guidelines.

The Solution

CapitalAx matched the buyer with an SBA-preferred lender comfortable with the standby note structure. The buyer's detailed business plan and operational experience offset the lower cash contribution.

The Outcome

The deal closed with just 5% out-of-pocket from the buyer. The 25-year amortization kept monthly payments manageable, preserving working capital for the transition period.