Loan Terms for Veterinary Practice.

I am looking into purchasing a veterinary practice and the commercial real estate. I was given the following term sheet. I do not have much experience with term sheets and was wondering if these are reasonable terms.

Loan Program: SBA 7a Loan

Loan Amount: 1.2 Million

Loan Sources & Uses: Practice and Realestate, Working Capital, Soft Costs

Equity injection: $20,000 (for real estate earnest money)

Earnest money deposit: $1,000

Interest rate: WSJ Prime Rate plus 2% (6% as of 5/16/17) to adjust quarterly on the loan

Amortization: 25 year term fully amortized

Repayment terms: 300 monthly estimated principal & interest payments $8,106

Prepayment penalty: 5% in year 1, 3% in year 2, 1% in year 3 and non thereafter. Borrower may make a principal reduction of up to 20% per year without triggering prepayment penalty.

Collateral: First lien on commercial real estate. First lean on assets of the practice.

Any thoughts, help, advice are appreciated!



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