SMB & ETA Acquisition Lender | Author | Closed $560 Million in 10+yrs| SBA loans from $2.5 - $10.0 million | tweeting real SBA stories | War Story Saturday 🪖
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It was just over a 4X Multiple. It will certainly value out given there were virtually no addbacks. We lent about 81%. Thanks for your interest and your questions 🤔
@grok what is multiple in reference here to? Ebitda multiple to set valuation for ltv basis? What advance rate would a SBA 7a loan and pari passu conventional loan get you and what would basis for valuation be?
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Thanks for your comments @CREValueLab
Great to see the work being put in and that there are still creative financing options available for acquisitions like this.
The SBA 7(a) and conventional structure is a great example. Bruce, I’d enjoy connecting at some point and learning more about what you’re seeing in the market.
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I had an $8,000,000 loan approved today for a Searcher acquiring a light manufacturing and installation company.
We did this with a $5 million SBA 7a loan and a $3 million conventional Pari Passu Conventional loan.
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I so appreciate your comments @SAOliver_Atty They are extremely meaningful to me.
Certainty to close and speed are two incredibly critical drivers when considering lenders.
I've seen friends go with other lenders and have their deals die unnecessarily due to speed, and sometimes other factors.
Something I've always highly respected about @sbabmarks is that he is clear and up front about what he can and can't do.
He knows his area of genius and if he works with you, he does everything in his power to help you succeed.
Really is inspiring to see such dedication to this community.
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Bruce Marks, MBA, CM&AA retweeted
Rate is effectively irrelevant to the outcome of an SBA deal. Certainty to close, of which speed is one factor, is extremely relevant. Which is why I have a FBOL term loan
At a 9% interest rate, annual debt service is 15.2% of enterprise value. At an 8.75% rate, it's 15.0%. So if you have a $3mm loan on a $1mm EBITDA business, you're paying $5k more per year in debt service with the higher rate. Amazing to me that anyone would even consider this when picking a bank
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Certainty to close and speed, versus a 25 basis points reduction in interest rate. I would love to hear what people thoughts are and which one would you take. I would greatly appreciate it if folks would respond.
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Just a reminder to those structuring seller debt as part of their transaction in an SBA loan. Even if the seller debt is on standby for two years under the new SOP 5010 8.1 it’s still must be amortized over a 10 year basis.
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Bruce Marks, MBA, CM&AA retweeted
This week on SMBX:
1. Operating businesses makes you see acquisition opportunities and inflection points investors often miss @scottfelsenthal
2. Seller references could mean the difference between another pitch and an executed LOI @Elialbrecht
3. “Cultural vs. Operational Due Diligence: Key Differences” @withkumo_
4. Non-standby seller debt counts toward DSCR @sbabmarks
5. Larger SBA acquisitions will need QoE work earlier in the process now - from Pease Bell
kumo.substack.com/p/take-fiv…
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I am aware that my posts are limited. Why, because I’m busy getting deals done.
I just issued a new term sheet, put 2 Pari Passu deals into underwriting and am working with several prospects.
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Yes, it was a busy week. 10/1 will come quickly.
Sellers who were playing games and looking for the best price are now going to have fewer Searchers who are able to buy their business.
Especially the larger transactions.
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But, I spoke with several folks this week who can easily inject half of the 10% required.
In fact, 2 Searchers committed to “walking down the aisle” together.
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Obviously, there has been a ton of posts around the new SBA SOP, so no need for me to restate the new rules.
But having said that, each deal requires structuring now and what happens before an actual LOI is submitted, so that you have the best chance of being the buyer.
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There are a lot of folks out there offering webinars around the new rules, but there is nothing better than a one on one to discuss your individual deal. This is where I can be best utilized.
I like to jump in early and help model your deal live for the best results.
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Bruce Marks, MBA, CM&AA retweeted
I speak to several searchers a week. If you are comfortable, submitting an offer on the sellers one year of best cash flow and paying a high multiple for it, perhaps you should rethink that strategy.
You can always convince yourself that you are getting a really good deal. I am the sounding board that will perhaps tell you differently.
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