The Problem: Business Acquisition With Collateral & Credit Issues
A beverage retailer, started in 2016, had a very successful start with a history of strong revenue. The startup business owner couldn’t manage the thriving business and wanted out. Our client, the buyer, had significant credit events and a collateral shortfall, which prevented the client from purchasing the business with a traditional loan.
- Credit Issues
Previous health problems caused an isolated lapse in good credit and prevented the client from purchasing the business with a traditional bank loan
- Collateral Shortfall
The buyer lacked specific traditional collateral requirements and other conditions to meet the demands of most banks.
The Solution: SBA 7(a) Loan With Seller Financing
First Business Bank helped its client to purchase this business with an SBA 7(a) loan that included 5% financing from the seller, a 15% down payment from the buyer, and 80% from First Business Bank. The 10-year loan terms also waived some traditional demands that would have been too costly for the buyer to accomplish and thus sink the transaction.
First Business Bank worked with the buyer and dropped some common requirements based on strong cash flow and good credit history aside from isolated events.
- Payment Terms
To help overcome a collateral shortfall, the First Business Bank structured the SBA 7(a) loan to provide seller financing and worked with the buyer to make the transaction happen