Did You Get an SBA Loan This Past Year?
Raise your hand if you took out a loan from the Small Business Administration in the past year. Many did.
Did you read the fine print? You might want to request a lien search on yourself or your company to see what all they have encumbered.
Here is what happens when you sell an asset with an SBA loan, even in the ordinary course of business. First, understand that there is nothing ordinary with an SBA loan. Nearly every time you request to release an asset, you will have to show financials to your loan officer. You will be preparing an updated profit/loss every couple of weeks.
The SBA is a busy department. It takes time to get anything back from them, and they won’t always release the asset under loan.
Most companies and individuals in the equipment industry already have a line of credit at their bank, maybe even a floor plan if dedicated to a brand or two. This means the SBA comes in third position—after the bank and the manufacturer—when paying out proceeds from the sale.
Know that when you have a deal where the seller has an SBA loan, the turnaround time for getting releases so you can take possession just got longer. Your seller might walk away from the deal and find someone who doesn’t care if the machine is released by the creditor.
Remember, the lien follows the machine.
Contact us at Ground Clearance to request a lien search and make sure you know where you stand regarding your SBA loan and your assets.