Thread by @SBA_Matthias

One critical document that is required when you are buying a business that operates out of a leased location is a landlord waiver (also called a landlord agreement). In this thread, I'm going to cover what it is and why it's important.

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When a business is financed with an SBA loan, SBA requires that a lender takes a General Business Security Agreement (a "GBSA") on the assets that are being financed with the acquisition. 1/x

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The GBSA, which is perfected by the lender with a UCC filing, allows the lender to liquidate the collateral of the borrower in the event that there is a default on the SBA loan. 2/x

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When a business is operating out of a location that is leased from a third party landlord (a company not owned by the borrower), a bank needs legal authorization to access the premises in the event of borrower default 3/x

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The landlord agreement is the document that provides the lender with permission from the landlord to access the property in the event of a borrower default, and access the borrower's business assets to liquidate them. 4/x

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95% of the time, the first time that the landlord agreement document comes up is after loan approval during closing. 5/x

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The issue with this is that when you are the buyer/borrower are dealing with a larger landlord, there can be a process involved with getting this document signed. 6/x

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Sometimes the landlord wants simple changes made, that can be agreeable to the lender, sometimes the requested changes make the document useless, and other times, the landlord simply won't sign the document. 7/x

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One of the smart things that you can do as a borrower during the underwriting process is to ask the lender for their landlord agreement document to get a head start on the process with having the document shared with the landlord to ensure that they'll sign it. 8/x

Doing so will help to prevent any delays in closing that may be spurred due to difficulty with having this document signed. I have seen a couple deals blow up before over the landlord not agreeing to sign this form. 9/x

If you found this thread useful, feel welcome to RT. If you have any specific questions relevant to a deal that you're working on, feel free to DM me or comment in the thread.