{"type":"rich","version":"1.0","provider_name":"Transistor","provider_url":"https://transistor.fm","author_name":"Letters of Intent","title":"Who Really Pays in a No Money Down Deal?","html":"","width":"100%","height":180,"duration":965,"description":"In this episode breakdown, Pankaj Raval and Sahil Chaudry follow the money behind the no money down business acquisition. Working from the SBA's newly revised lending rulebook, SOP 50 10 8.1, they map where acquisition money actually comes from and what each funder takes in return.\nThrough this practical analysis, Pankaj and Sahil extract critical rules on SBA down payments, seller financing, and leveraged deal structures, that apply directly to founders and leaders of growing private enterprises buying, selling, or financing a business.\nThis podcast is for informational purposes only and does not constitute legal advice.\n\nTakeaways\nThe Return of the Equity Floor: A first-time buyer using an SBA 7(a) loan, the SBA's main program for financing business purchases, must bring an equity injection (the buyer's own stake) of at least 10 percent of total project costs, meaning price, closing costs, and any working capital in the loan. Under 8.1, that floor can't be reduced or waived for an initial acquisition. Seller notes and small passive investors now share one bucket capped at half of it. \nWhose Money, and What They Get: Every no money down deal is funded by someone: the seller through a note, the seller through stock, the business through its own assets or revenue, or a government-backed lender. Each source receives an enforceable right in return, such as a promise to pay, a piece of the company, or a lien (a lender's legal claim on assets). In most of these structures, the seller carries the most risk. \nThe Seller's Tax Trap: Under the installment method, a financing seller generally reports gain as payments arrive, but depreciation recapture, the slice of gain tied to past depreciation deductions, is taxed in the year of sale. Paying a seller in stock is a taxable exchange unless it fits a non-recognition rule such as Section 351, which requires contributors to own at least 80 percent of the corporation immediately after. \nWhen the Business Pays for Its Own Sale:...","thumbnail_url":"https://img.transistorcdn.com/nODHY0YK7swr_eu_9CBnHlaREdt4O-QJxCNv3UFQkmY/rs:fill:0:0:1/w:400/h:400/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS8yMWY4/ZjJkZjk4OTE4ZTg4/N2E2ODhhNjNjZTUz/YjM1Yy5wbmc.webp","thumbnail_width":300,"thumbnail_height":300}