SBA Pari Passu Loans For Larger Business Acquisitions
Buying a business that costs more than one SBA loan can cover? A pari passu structure pairs a $5 million SBA 7(a) loan with a conventional loan that shares the same collateral equally, so you can buy a bigger business with as little as 10% down. We know which lenders do these, and it costs you nothing.
What Pari Passu Means
Pari passu is Latin for "on equal footing." The SBA loan and the conventional loan sit side by side on the same collateral with an equal lien, instead of one loan being senior to the other. That lets a lender finance an acquisition larger than the SBA loan limit while keeping the SBA terms on the biggest piece.
- Acquisitions where the price is well above $5 million
- One lender, or two lenders working together
- The SBA loan keeps its long term and no balloon
- The conventional loan covers the amount above the SBA limit
- Working capital and closing costs can be part of the project
- Seller notes and investors can still fund the Down Payment
When It Fits
- The business is profitable, with 2 or more years of history, and its cash flow covers both loans with room to spare. SBA sets the minimum at 1.25 times the debt payments for an acquisition.
- The price is supported by an independent business valuation, and purchases of $3 million or more (not counting real estate) include a Quality of Earnings report.
- You or your team have management experience that fits a business of this size.
- You can bring 10% of the total project cost, with up to half of it from a seller note on full standby.
- The lender is comfortable holding the conventional piece. Not every SBA lender does these, so lender choice matters.
Not sure you qualify? Tell us about your deal and we will tell you which lenders fit.
How Much Do You Need Down?
The 10% Down Payment is measured on the whole project, including the conventional loan, not just the SBA portion. The same sources count as on any SBA acquisition.
Up to half from the seller
A seller note on full standby, with no principal or interest payments for the life of the SBA loan, can cover up to half of the Down Payment.
Your cash, gifts or retirement funds
Cash that is not borrowed counts, including gifts and money from retirement accounts.
Investors
Minority investors under 20% can fund part of the Down Payment. Anyone who owns 20% or more guarantees the SBA loan.
Example: An $8,000,000 Business
| Purchase price | $8,000,000 |
| Down Payment (10%) | $800,000 |
| From the seller (note on full standby, max half) | Up to $400,000 |
| SBA 7(a) loan | $5,000,000 |
| Conventional loan, same collateral, equal lien | About $2,200,000 |
A simplified example. Working capital and closing costs in the project raise the totals, and each lender sizes the conventional piece to the cash flow.
Try The Numbers On Your Deal
Enter a price above $5 million and see how the financing splits: the SBA 7(a) loan up to $5 million, the conventional loan alongside it, your Down Payment and the combined payment.
Want more control, with investors, real estate or a partial-standby note? Open the full deal structure builder or see how much business you can afford.
How These Deals Are Usually Structured
Shared first lien
Both loans are secured by the same business assets with an equal lien. SBA does not treat this as piggyback financing when the conventional loan’s maturity is not shorter than the SBA loan’s.
Matching terms
The conventional loan usually runs as long as the SBA loan, which is up to 10 years for a business purchase and up to 25 years for real estate.
One lender or two
Often the same bank makes both loans. Sometimes a second lender takes the conventional piece alongside the SBA lender.
Seller note
Many larger deals include a seller note. On full standby it counts toward your Down Payment; otherwise it must fit the cash flow alongside both loans.
Due diligence
Expect a Quality of Earnings report, a business valuation and a closer look at management depth than on smaller deals.
Line of credit
A working capital line can close alongside the two term loans.
How It Works With GoSBA
One team from your first call to closing. You never pay us; the lender does, after closing.
Send your deal
Tell us about the business and what you need. It takes about 2 minutes.
We package it
We build the loan package, including the business plan and projections lenders ask for.
Lenders compete
We take it to the SBA lenders that fit from our network of 50+, and you choose the best offer.
We close it with you
We handle lender questions and keep the deal moving through closing.
Documents You Will Need
Having these ready speeds everything up. We help you gather anything missing and send it to lenders in one clean package.
- Signed letter of intent (LOI) or purchase agreement
- 3 years of the business’s tax returns
- Year-to-date profit and loss statement and balance sheet
- Quality of Earnings report, or the seller’s financials to start one
- Accounts receivable and accounts payable aging reports
- Your last 3 years of personal tax returns
- Personal financial statement and resume for each owner of 20% or more
- Proof of your Down Payment funds and investor commitments
Larger Acquisitions We Closed
Real loans we placed. Borrower and lender names are kept private.
Commercial Printing Company
$5.0M SBA 7(a) + $1.04M conventional loan; seller note on full standby
Fiberglass Pool Installation Company
5.75% down + 10% seller note on full standby
Exterior Restoration Contractor
10% down + seller note on full standby; includes the owner-occupied building
Liquid And Pneumatic Hauling Company
10% down from investors + seller note + SBA Express line of credit
Excavation & Earthwork Contractor
10% down + SBA Express line of credit
Market Research Firm
10% down + SBA Express line of credit
What Borrowers Say
Ishan is phenomenal. He guided me through the SBA process, connected me to multiple lenders, and ultimately drove to a deal at much better terms than I expected.
Just when the deal looked like it could not get completed, Ishan found a lender.
Many a loan broker couldn’t get our deal over the line but Ishan said he could and he delivered 110%.
Frequently Asked Questions
What is an SBA pari passu loan?
It pairs an SBA 7(a) loan with a conventional loan that shares the same collateral with an equal lien. It lets you buy a business that costs more than the $5 million SBA loan limit.
How big a business can I buy with pari passu financing?
The SBA loan is capped at $5 million, and the conventional loan covers the amount above that. How large the conventional piece can be depends on the business’s cash flow and the lender.
How much do I need down?
At least 10% of the total project cost, including the conventional loan. Up to half can be a seller note on full standby, and the rest can come from cash, gifts, retirement funds or minority investors.
Is pari passu the same as piggyback financing?
No. Piggyback financing puts the SBA loan in a junior position, which SBA does not allow. In a pari passu deal the loans share the lien equally, and SBA accepts it when the conventional loan’s maturity is not shorter than the SBA loan’s.
Do all SBA lenders offer pari passu loans?
No. Many lenders stop at $5 million. We know which lenders hold the conventional piece and take your deal to them.
What does GoSBA cost?
Nothing. We are paid by the lender after your loan closes, not by you.
Other SBA Loans
Also see: Closed Deals · Our Team · Reviews · Pre-Qualification Letter
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