Many properties that potential buyers find “off market” tend to not have the historical cash flow a bank needs to approve a transaction. The reasons could stem from poor marketing, low occupancy, lack of management or, in some cases, failure to report income incurred.
When using an SBA loan product to purchase a facility with poor historical financials, the new deal can be viewed as a “start-up”, as the new buyer will be running the site differently. With realistic projections and a business plan that justifies changes in operations, the SBA will allow a deal to be approved based on the buyer’s projections even with subpar historical data.
One thing to keep in mind is that a bank using the SBA loan product will need to verify the seller’s tax returns via the IRS 4506-T form. So, tax returns and tax transcripts still need to be provided in order to verify the seller’s historical data.
Nick Collins
Commercial Lender – Vice President
Bank Five Nine
155 W. Wisconsin Avenue | Oconomowoc, WI 53066
p: (262) 560-2016 c: (262) 468-6169 f: (262) 804-9926
nick.collins@bankfivenine.com
