Advanced SBA Structuring: A $9M Pari Passu Case Study | Kalen Foster | Ep. 35 | My SBA Loan Pro

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In this episode, host Ryan Smith is back in the studio with Kalen Foster to break down a complex pari passu transaction that took over two years to get across the finish line. They pull back the curtain on what happens behind the scenes of complex SBA deals and show how expert-level knowledge of the guidelines can turn a highly challenging file into a successful closing.

This specific deal involved borrowers operating a daycare and a Montessori school who were looking to acquire a new business and real estate while also refinancing existing high-interest debt. Because the transaction exceeded the $5 million SBA aggregate limit, the lending team had to employ advanced structuring to make the numbers work.

Key Takeaways from this Episode:

• Structuring Large Transactions: How the team managed an $8 to $9 million deal using a pari passu structure alongside the SBA loan.
• Navigating SBA SOPs: Why deeply understanding the SBA Standard Operating Procedures (SOP) is critical, and why lenders must meticulously interpret the rules to ensure eligibility.
• Overcoming Setbacks: How the team navigated changing SBA rules over the two-year timeline, including evolving affiliation rules and guarantee requirements for owners.
• Creative Problem Solving: How the team utilized different NAICS codes between the daycare and Montessori businesses to separate lending buckets and maximize funding.

Key Chapters:

00:00 – Introduction: The Two-Year Pari Passu Deal
01:31 – Client Background & Deal Needs
02:34 – Deal Complexity & Borrower Sophistication
04:44 – Keeping the Deal Alive Through Setbacks
07:23 – Initial Structuring & Real Estate Hurdles
10:20 – Utilizing NAICS Codes for Separate $5M Limits
12:23 – Navigating SBA Ownership & Guarantee Rules
14:55 – Securing the SBA eTRAN Approval
17:03 – The Importance of Bank & Banker Expertise
20:01 – Winning the Deal with Structure & Servicing
22:36 – Becoming a Student of the SBA SOP
24:55 – Adapting to Changing SBA Rules Over Time

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https://mysbaloanpro.com⁠ – My SBA Loan Pro Podcast
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