CBB CBB Buyer Qualification & Acquisition Financing 3

Question 1

What is a 'business plan' requirement in an SBA loan application for a business acquisition?

Accepted Answer

A document outlining the buyer's operational strategy, financial projections, and management plan for the acquired business

Answer

A marketing brochure for the business being acquired

Answer

A certified audit of the seller's prior three years of financials

Answer

A government-mandated safety plan for workplace compliance

Question 2

What is 'mezzanine financing' in the context of business acquisitions?

Accepted Answer

Subordinated debt that ranks below senior bank debt but above equity, often used to bridge financing gaps

Answer

Financing for the physical renovation of a business's mezzanine floor

Answer

A type of seller financing where payments are deferred for five years

Answer

A government grant program for minority business buyers

Question 3

Why would a seller prefer an all-cash offer over a financed offer?

Accepted Answer

All-cash offers eliminate financing contingency risk and enable a faster, more certain close

Answer

All-cash offers always come at a higher price

Answer

Sellers are required by law to prioritize cash offers

Answer

All-cash buyers always agree to better non-compete terms

Question 4

What does 'personal guarantee' mean in the context of a business acquisition loan?

Accepted Answer

The buyer's personal commitment to repay the loan even if the business fails to generate sufficient cash flow

Answer

The lender's promise to fund the loan within 30 days

Answer

A guarantee from the seller that the business will hit revenue projections

Answer

A government guarantee program covering 80% of the loan balance

Question 5

What is an 'equity rollover' in a business acquisition?

Accepted Answer

The seller retaining a partial equity stake in the business post-sale as part of the deal structure

Answer

Converting business inventory into cash before closing

Answer

Transferring the buyer's IRA funds into the new business

Answer

Rolling over unsold inventory to the next fiscal year

Question 6

What is the primary qualification concern for a buyer seeking an SBA loan with no prior business ownership?

Accepted Answer

The buyer must demonstrate relevant management experience or industry knowledge to offset the lack of ownership history

Answer

The buyer must be a US citizen to qualify for SBA financing

Answer

The buyer must purchase a franchise rather than an independent business

Answer

The buyer must have a graduate business degree