How to Get a Loan to Buy a Preschool

If you want to sell your preschool, your buyer will likely need to get a business loan to buy it. You can use this information below to either get a loan yourself to buy a preschool or to help your buyer get a loan to buy your preschool.

Buyer should choose a bank to try to get SBA 7A loan

Possible banks to choose from:

• Wells Fargo
• D.L. Evans
• Banner Bank
• Your own personal bank

Buyer should call each bank, ask to talk to someone about getting an SBA 7a loan and explain what they want to do

Buyer should choose the bank that they feel is most receptive to working with them (some banks are more eager to take on SBA loans than others), and then move forward with the entire application process

Note: Once a bank takes the final application, it’s final. If they say yes, awesome. If they say no, they won’t change their mind. 

If Buyer gets a no, the Buyer should apply to a different bank until they get a YES!

The biggest reason a bank will say NO is because the business valuation (aka the loan amount being requested) is too high (aka they don’t feel the business is worth that much – and they won’t loan any money above a certain amount they feel it’s worth). When the business valuation meets their criteria (3 years’ average net income x 4) and IF everything else on the application is good to go, they will approve it.

What banks expect when they loan you money from an SBA 7A loan

Buyer will need to pay 10-15% down payment at closing

• If you have 15%, you have a much higher chance at getting approved
• Generally, it’s a well-known fact that you shouldn’t voluntarily give up the information on where you are coming up with that down payment. (AKA it might be your dad who is loaning you the money, and therefore you now owe him with a loan, but unless someone point blank asks you, don’t explain where you got the money to put down at closing.)

SBA loan will cover 85%

What banks need to determine if you can get an SBA 7A loan or not

• Credit Score: Preferably 660+ for all primary business owners. (Exceptions to credit score are made on a case-by-case basis.) Owners cannot have open collections to be considered for SBA loans. (Again, credit situations are on a case by case basis.)
• Collateral: SBA loans don’t need to be 100% collateralized, but the more business and/or personal collateral you bring to the table, the easier it will be to get your loan approved
• Other requirements: No delinquencies or defaults on debt obligations to the U.S. government (including student loans)
• Business Tax Returns (Owner provides last 3 years)
• Personal Tax Returns (Buyer provides last 3 years)
• Professional Business Plan showing 3 years future financial projections
• Buyer Resumes
• SBA Loan Application (Bank gives this to Buyer to fill out)
• Proof of Ownership
• Business Certificate/License
• Business lease
• Business Financials
• YTD Profit and Loss (P&L) Statement (dated within last 90 days)
• YTD Balance Sheet (dated within last 90 days)
• Business Debt Schedule
• Personal Financial Statement (Bank gives this to Buyer to fill out)
• LLC Operating Agreement
• Valid EIN and DBA registration