Waterfall/Capital Stack

1) SBA (7a) bank debt of course sits in first position and the loan payment obligations (generally over a 10 year term, but could be longer if real estate is included in the deal) is always paid and in the event of an exit or wind down, all proceeds first go to the bank balance repayment. 

2) SHV (and perhaps other investors, if any, in the round) receive the remainder and are owed 100% of the principal equity investment plus and accrued but unpaid interest, until fully returned. The sources for this payment generally come from company issued dividends, but in the event of an early sale could come from merger proceeds, or a bank cash out refinance, though both would be unusual to occur in the first 5-10 years post acquisition. 

3) Once SHV/other preferred investors receive 1X on our equity + interest, every additional $1 that is dividend out is split per the cap table, ie 81% to the searcher (you!) and 19% to SHV, or a different split per above modeling scenarios if the seller retains equity, etc. If there is a seller financing note (we generally recommend it), this note is often paid off before additional dividends to the Searcher/SHV are distributed.