Can I stack CSBFP, BDC and a credit union loan on one business purchase?

The three sources work differently, which is why combining them is a question of fit rather than permission. The CSBFP shares a lender’s risk on a loan and works through lenders that offer it, so the program page tells you to ask your financial institution. BDC offers its own business purchase or transfer loan and lists intellectual property, goodwill and client lists among what it can finance. A credit union is another lender with its own policies.

Who ranks first

Security is where stacking succeeds or fails. Where an after-acquired clause in a general security agreement or universal movable hypothec held by the lender or another creditor reaches the assets a program loan will finance, the lender must obtain postponements of rank so that its own security is first ranking. Where an asset is financed by a program loan and by other sources, apart from the borrower’s own funds, the guidelines require the security on that asset for the conventional loan and the program loan to be equal in rank. Where its security includes an after-acquired clause and the borrower later finances another asset under a conventional loan, the guidelines let the program lender, while the loan is in good standing, grant a postponement of its security position on the asset being financed under the conventional loan. Where a program loan finances intangibles or working capital, the lender must take security on other business assets even if they are already subject to prior charges.

How the caps and exclusions shape the split

Program loans held by the borrower and its related borrowers count together against the caps, so a second program loan does not raise the ceiling. The program treats what a vendor finances as ineligible, and it does not finance share purchases. Goodwill, if part of a going concern purchase, falls in the intangible layer, the program’s smallest. BDC separately lists access to extra financing for intellectual property, goodwill and client lists. The comparison of CSBFP-backed and conventional lending sets out how the two types of loan differ.

Sequence the conversations

BDC says it can review a request once you have found a business and negotiated the main terms, and the guidelines expect the purchase agreement to allocate the price among the assets. Tell each lender about the others at the start, because their security claims overlap and each may need the others’ postponements in writing before closing.