Anybody aware of SBA-alternative lenders with non-recourse options?

September 03, 2019

by a searcher from Arizona State University in Phoenix, AZ 85004, USA

Have a deal in escrow and have had great luck with SBA lenders, but was curious if anybody was aware of options that are non-SBA (primarily for non-recourse), potentially more flexible repayment terms, etc.

We're aware this would come in exchange for higher interest rates, warrants, equity, etc. and are willing to consider these options.

Recently completed Q of E and slated to close Mid-October.

We are self-funded on the search and equity injection side and have a fair amount of personal liquidity.

Deal size - 3.5M

TTM "SDE" - 1.36M

If you're aware of any alternative options, please let me know.

Reply by a searcher
from Arizona State University in Phoenix, AZ 85004, USA

I would imagine it's growing, but still on the minority side, given the traditional SF structure. For self-funded, I would imagine it's the majority from the conversations I've had with other searchers. Overall, it's pretty attractive financing (easier underwriting, longer amortization term, no covenants, minimal equity injection, etc), but the downsides are the Guarantee fee and PG.

Reply by a lender
in Yorba Linda, CA, USA

We have a non-recourse conventional program, but one of the requirements is minimum EBITDA of $1.75 million, so it unfortunately won't work for a deal of this size. My recommendation is to try a local bank, or even the bank the seller currently works with. It's not easy to find conventional / non-recourse loans for smaller companies.

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