Real Estate Brokerage Financing

[Josh Harold]

I am an Associate Broker and I have been approached by my Broker which owns the independent Brokerage in purchasing the business. I am looking for a lender that can do this. No RE involved just the business. Any recommendations is greatly appreciated. 

[Charlie MacPherson]

Talk with an SBA lender about a 7(a) loan.  It should require 10% down payment with roughly Prime + 2% and a 10-year term.

When I work with business buyers, I recommend a handful of lenders who are part of the SBA Preferred Lending Program (PLP), as the SBA accepts their underwriting without doing it again when they receive the loan package.  That shaves 4-6 weeks off the process. 

I also want lenders who are going to sell the loan on the secondary market.  Those who are keeping the loan in-house often impose more restrictions and tighter terms (called "overlays") than those who don't.

Do you have a model in place to figure out a purchase price?  My database suggests roughly 2 X SDE (Seller's Discretionary Earnings).  That's income + add-backs.

One other note.  You'll need a broker of record if the existing broker is exiting the business.  So either you'll have to sit for the broker's exam or find someone else to fill that spot.  You probably already have that figured out.

Good luck!

[Robin Simon]

Quote from @Josh Harold:

I am an Associate Broker and I have been approached by my Broker which owns the independent Brokerage in purchasing the business. I am looking for a lender that can do this. No RE involved just the business. Any recommendations is greatly appreciated. 

 You'd probably want to search locally for this - if in West Virginia, first search would be local banks/credit unions or SBA loan providers