SBA COVID-19 Incentive Available for Business Buyers

Sounds ridiculous?

It is probably because you believe COVID-19 has already ruined your plan to buy your own business in 2020.

What if the SBA would provide a huge incentive for you to purchase your own business?

Yes, if you purchase your business prior to September 27, 2020, the SBA will make the first six loan payments for you.

Yes, the SBA will pay the first six payments of principal, interest, and fees for the Buyer for all new SBA 7(a), 504, and microloans issued prior to September 27, 2020.

This is not about signing a forbearance agreement with your lender so that your payments may be deferred. SBA is making full payments of principal and interest to your SBA lender for the first six months straight and you will be no longer responsible for the payments.

There has been heavy coverage in the mass media about Paycheck Protection Program (PPP) which is a part of federal stimulus package under The Cares Act but this huge incentive for buyers of businesses was also included in this package.

There is a couple of very important that you should keep in mind to benefit this great incentive for business buyers:

  • Maximum loan amount for this SBA guaranteed loan, primarily SBA 7(a) is $5 million.
  • Loans must be submitted to and issued by the SBA by September 27, 2020 which is 6 months from the date this Cares Act was signed into law. In other words, SBA loan number for your loan to purchase your business must be issued to your lender by September 27, 2020.
  • It typically takes 60 to 90 days to complete a SBA loan process.

This incentive will allow you as buyer to potentially save hundreds of thousands of dollars if you successfully purchase a business within this time frame.

For example, for a business being purchased for $1,000,000, your savings will sum up to $56,650.44 based on a 15% down payment at 6% annual interest with a 10-year amortization.

Any other question? Please feel free to contact us!   We are here to assist you accomplish your goals even in this challenging time.