New SBA Guidelines Help Pharmacy Sellers and Buyers

The SBA released a change to their guidelines this week. The big news is that seller equity rolls are now allowed! This is huge!

• Sellers can stay longer than a year if they retain any equity, and can be “key employees.”
• Sellers will not have to personally guarantee the buyer’s loan if they retain less than 20% equity. They will if they retainer greater than 20%. We are seeing deals done with 19% already. 
• The 10% equity injection (down payment) can be satisfied by the company itself if seller rolls equity and the balance sheet is strong enough to pass a 9:1 “debt to worth” ratio with its tangible assets, so 0% down is possible.
• Seller notes can be applied as equity injection into a deal if they are on either a two year standby (not 10 as before) or just interest only payments are required on the note.
• A minimum buyer cash injection will still be required.

If you are thinking of buying or selling a pharmacy, give ColonyRX a call and we can help you navigate these new guidelines to structure a deal that is a win-win for all parties.