Financing Scenario
HVAC Business Case Study
Buyer acquired an existing HVAC Business. The company was founded by the owner in 2002. The company specialized in residential and commercial HVAC services. This transaction was an asset sale.
Purchase Price $800,000
Loan Structure
- Purchase Price $800,000
- SBA Fees/Costs $44,000
- Working Capital $50,000
- Total Project Cost $894,000
- Seller Note $0
- Buyer Equity $89,400 (SBA requires minimum buyer equity of 10% of the Total Project Price)
- SBA 7a Loan $804,600
Loan Terms
- Term 10 Years
- Amortization 10 Years
- Estimate Payment $9,000 (approximate – based on Wall Street Journal Prime Rate + 2.75% (SBA Maximum)
Personal Credit
- Average Credit Score 792
Additional Collateral Pledged
Buyer pledged primary residence and two investment properties. All three properties had more than 25% equity and therefore were required by SBA to be pledged as collateral for the loan.
Total Cost
Remember your total out of pocket costs will be higher than those costs estimated within the SBA loan as they vary by transaction. Additional costs to consider:
- Life Insurance Policy
- Business Insurance Policy
- Title/Transfer tax on vehicles included in the sale
- Attorney costs
- Relocation costs
