$700k - $1.5mm EBITDA Loan w/ no PG but retain Majority ownership

July 12, 2025

by a searcher from Harvard University - Harvard Business School in New York, NY, USA

Are there really absolutely no loan options out there for great deals with $750k to $1.5mm EBITDA businesses bought at a sub 5x multiple ($3mm to $8mm TEV) that require NO PG? I see lots of posts on the forum about SBICs but those appear to be for $2mm+ EBITDA opportunities. Has anyone explored raising financing for subscale acquisitions and able to retain 70%+ common equity ownership out of the gate with no PG on such deals? I would imagine some lenders are willing to get creative for great opportunities and require no PG. Would love to have a conversation if so.

2 Likes

4 Replies

165 Views

Replies

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I see posts often for individuals looking for loans with no personal guarantee. For smaller transactions, usually sub $15 million in debt, unless the loan-to-cost is really low, the DSCR is really high, and the deal is pretty much fully backed by collateral, there are very, very, very limited options for non-recourse financing. And you are definitely not going to get it from a traditional bank. Most banks' loan policies require personal guarantees on all smaller transactions and it would be a substantial exception for them not to use one. I think a better question to be asking is "Why do banks want a personal guaranty?" When you are buying a small business or looking to borrow commercial capital, the business is likely operated by just you or a small team of owners who fully control that business. Most Banks, although they might do some quarterly or annual monitoring of the credit relationship, are not monitoring the business every day. The decisions you and your team make can greatly impact the transaction, and if they negatively impact that business, by the time the lender typically finds out, it likely is already too late and they have loss exposure. When you are asking a bank to stand behind a transaction and commit their depositors money to that transaction (keep in mind - they are lending depositor money - that is where the money comes from for loans), then it is appropriate for the Bank to also ask you to stand behind that transaction. There is significant data that shows Banks lose substantially more money on loans that go bad when there is no personal guarantee. The owners are less incentivized to work with the Bank when there is no personal guarantee and much more likely to make decisions that serve their personal interest versus that of the business as a whole. The market is currently in a place where there are plenty of loan opportunities for lenders to pursue and most lenders have limited capital to lend to begin with. Lenders are not interested in doing transactions that are higher risk. Because of that if you are looking for non-recourse financing, your deal is not going to be competitive for banks to bid on. I am not saying you will not find the unicorn lender willing to do the deal non-recourse, but more than likely if you find someone the cost is going to be substantially higher.

Reply by a professional
in Houston, TX, USA

Hello, it depends on the assets and how much you're putting down, would love to talk though and see what's possible. Contact me at redacted

+2 more replies.

Join the discussion