The Situation: Management-Led Acquisition Of Product-Supply Company With SBA 7(a) Loan

After a successful career of more than 20 years in management and sales, our client had the opportunity to purchase the products/equipment supply business where he was general manager for the past few years. However, he would also need to buy its sister company — a consulting firm in the same industry — as the two companies were up for sale together. Given the COVID-19 pandemic adversely impacted many businesses, many traditional lenders remain averse to financing business acquisitions that are not fully collateralized.

  • Change of Ownership Financing Risk
    Business loan requests to finance a change of ownership are inherently risky since leaders previously responsible for the business’ success are no longer part of the operations. The SBA guaranty on a portion of the loan helps to decrease the lender’s risk.
  • Collateral Shortfall
    The lending package was secured by equipment, inventory, and accounts receivable because there was no commercial real estate in this loan request.
  • Working Capital
    Working capital to cover operating expenses for the first few months of new ownership was an additional need identified that clients sometimes don’t anticipate.

The Solution: $2.79mm SBA 7(a) Loan From First Business Bank

First Business Bank, an SBA-designated Preferred Lending Partner, provided an SBA 7(a) loan totaling $2,790,000, which included funds to acquire the businesses, closing costs, and working capital for operations.

  • Reliability
    First Business Bank’s SBA Lending team worked closely with the client and the seller to achieve a rewarding end-result. The client’s dream of owning a business is now reality!
  • Dependability
    First Business Bank’s SBA Lending team guided the client through the loan process and provided the financing facility in accordance with the timeline desired by the client and seller.
  • Functionality
    Using the SBA 7(a) program, First Business Bank’s loan facility was the right loan for this client, allowing him to acquire this business he had been managing for years.