Choosing a Lender

The majority of acquisitions require some level of bank debt to facilitate the transaction and to greatly enhance returns for the buyer. In most cases, buyers want to use as much bank money as possible and utilize their own personal funds for working capital and for family needs.

Banks will generally require about a 20% down payment to consider lending on a transaction, and most banks will use the SBA guarantee program to cover the intangibles such as Goodwill. Without the SBA guarantee, banks would only be loaning on a percentage of hard assets, i.e., machinery, trucks, equipment, and real property.

Since the vast majority of businesses sell for much more than just the value of hard assets, a buyer will need to seek an SBA lender experienced in acquisition lending. There are many SBA lenders, but few who are proficient at financing business purchases.

We have witnessed buyers wasting lots of time (weeks and months) in an effort to meet with 5 or 6 banks.  Often, this results in endless promises and confusion, only to leave the buyer disappointed in the end. Loan Officers want deals, but they have to get them approved internally and most times the loan committees are more conservative and cautious than the loan officer. Apex has experience dealing with the various local and regional bankers and knowing what they are looking for in a deal. We are here to help.

To be very clear:  We do not work for the banks or get paid by the banks. Our relationship with banks involves knowing who is doing deals and assisting buyers and sellers with getting financing for a transaction. We try to find the path of least resistance because we know that time can kill deals.

Talk to your Apex Business Advisor to answer any of your questions regarding buying or selling a business.

Other Apex News:
Please join me in congratulating Apex’s Valerie Vaughn for obtaining her Certified Business Intermediary (CBI) designation!

Doug Hubler
President