In the 504 loan program SBA considers a change of ownership to be a "new" business because it will result in new, unproven ownership/management and increased debt unrelated to business operations. New businesses require an additional 5% equity contribution towards the purchase of real estate and equipment.
Now, Evergreen Business Capital may advise the SBA on whether or not a small business is a new business or existing businesses. A recent revision to SBA rules provides Evergreen options to evaluate new ownership and debt incurred through ownership change. We must present an explanation of the new owner's experience and explain why any additional debt incurred through ownership change does not directly impact business. If there is a sufficient case, this can help the business avoid being classified as a start up business, which would require an additional 5% equity contribution.