SBA enacts changes to simplify buyout process, expand access to loan programs

Whether starting a new business or seeking to expand your current operation, a loan from the Small Business Administration (SBA) can provide funding to fuel your organization's growth.

The SBA is a government organization that guarantees portions of loans specifically designed to meet the key financing needs of small businesses by connecting owners and entrepreneurs with approved lenders. SBA loans can be a great option for finding assistance with short- and long-term working capital, or making large purchases related to the success of your business.

While SBA loans can provide an affordable way for small businesses to grow, the SBA has long been concerned about the ability of entrepreneurs from traditionally underserved populations - such as minorities, women and veterans - to secure these loans. As a result, they recently enacted a series of changes to their most popular loan programs to boost access to capital for small businesses who may have been denied credit in the past based on outdated qualification criteria.

The changes, which took effect in May, accomplish this goal by: expanding the number of lenders who can process SBA loans; helping more businesses qualify under less restrictive credit criteria; and streamlining the loan application process - paving a more equitable and efficient path to securing and approving SBA loans.

Additionally, the SBA made several changes to their buyout rules that will take effect on Aug. 1. For full buyouts, sellers can stay longer than a year if they retain any equity. Sellers will not have to personally guarantee the buyer's loan if they retain less than 20 percent equity but will be required to do so if they retain greater than 20 percent.

A seller note can be applied as a down payment if it is on either a two-year standby (previously 10 years) or if interest-only payments are required on the note. However, this will be at the discretion of the lender, who may still require a down payment from the buyer. Minimum buyer down payments will still be required.

Further, partial business purchases are now allowed and can be a great option when considering buying out one of your partners or elevating an employee into ownership. If a buyer is acquiring more than 80 percent, the new partial buyout changes work well, as the business will be considered a borrow/co-borrower and buyers will provide the personal guarantee. For both full and partial buyouts, seller debt can still be used to meet down payment requirements, which can now be on a 24-month standby instead of matching the SBA loan terms.

The process of applying for an SBA loan can be overwhelming, but Busey's SBA Lending team has the resources needed to simplify your experience. With our knowledgeable lending professionals, fast approval process and competitive rates, our team can help you navigate these new rule changes and secure an SBA loan that will take your business to the next level.

As an SBA preferred lender, Busey is able to streamline the loan process, which allows you to focus on what matters most - growing your business. Whether you are looking to start, expand or acquire your own business, we can help you obtain the financing you need - no matter what challenges you face.

To explore loan eligibility requirements, hear more about the new rule changes or find out if an SBA loan is right for your business, visit

• Steve Lasiewicz is Senior Vice President - Director of Government Guaranteed Lending with Busey Bank.

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