Summary

In this episode of the Steps To Sold podcast, Brandon Bourgeois and Chris Sater discuss significant changes to the SBA Standard Operating Procedures (SOP) with guest Huy Tran from Byline Bank. The conversation covers the importance of SOPs in guiding SBA lenders, the impact of recent changes on business acquisitions, and the implications for buyers and sellers. Key topics include partial buyouts, seller guarantees, down payment requirements, and the need for buyers to demonstrate financial commitment. The episode also addresses the rising default rates in SBA lending and offers practical tips for navigating the new guidelines effectively.

Takeaways

• SOPs are essential for guiding SBA lenders in loan processes.
• Recent SOP changes will significantly impact business acquisition deals.
• Partial buyouts now require full seller guarantees for two years.
• Buyers must demonstrate financial commitment with down payments.
• Cash components are not considered legitimate ad backs in financials.
• SBA franchise registry is being reinstated, affecting franchise acquisitions.
• The SBA lending capacity may need to be raised to accommodate larger deals.
• Default rates in SBA lending have been rising, indicating potential risks.
• Clear communication between buyers, sellers, and lenders is crucial for successful transactions.
• Organized financial documentation can streamline the SBA loan process.

Chapters

00:00 Introduction to SBA SOP Changes

02:02 Understanding the Importance of SOP

06:46 Recent Changes in SOP Guidelines

07:29 Key Impacts on Business Acquisitions

14:00 Changes in Minority Investor Guarantees

15:18 Down Payment Requirements and Seller Financing

19:43 Raising the SBA Lending Capacity Threshold

22:15 Financial Documentation Flexibility

23:48 Navigating SBA Lending and Business Sales

27:11 Impact of New SOPs on Deal Flow

30:39 Understanding Default Rates in Business Acquisitions

33:35 Interest Rates and Their Effects on Business Loans

39:37 Real-Life Examples of Licensing Challenges in Business Sales

43:11 Navigating Seller Expectations and Market Values

44:32 Strategies for Streamlining the SBA Process

48:47 Understanding Legitimate Ad Backs in Business Sales

55:46 Preparing for New SOP Guidelines

57:12 Maximizing Loan Opportunities Beyond Business Acquisition

Keywords

SBA, SOP changes, business acquisition, lending, preferred lender, financing, business brokers, seller financing, down payment, loan guarantees