Asking for Opinion: When to Get an SBA Loan?

searcher profile

December 12, 2024

by a searcher from HEC School of Management, Paris in San Diego, CA, USA

Do you have any guidelines for when using an SBA loan to acquire a company makes sense?

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commentor profile
Reply by a professional
from Taylor University in Indianapolis, IN, USA
The business will need to be able to cash flow the debt based on the historical cash flow of the business. The lender will measure that by calculating the debt service coverage ratio based on the proposed debt and the historical cash flow. You also need to be willing to personally guarantee the loan and probably put up equity in your home as collateral. Credit score probably needs to be 650 or above. You will need to have a 10% down payment / equity investment and then probably another 10% as personal savings as backup for a rainy day.

If you can say yes to all of those things, then SBA could be a good option!

In terms of finding the right SBA lender, we created a free little dashboard that allows you to sort and filter the publicly available SBA loan data so you can actually sort by industry, state, and by loan purpose including acquisition loans specifically and see which lenders are most active and experienced. That tool is free here - https://www.projectionhub.com/data/sba-lender-finder
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Reply by a lender
in Ponte Vedra Beach, FL 32082, USA
Options for lending can vary significantly dependent on project type and specifics. Many are ideal for SBA while many are equally not ideal. Its a bit too generalized of a question, I am happy have a more in depth conversation about conventional financing, non-bank lending, DSCR lending, private lending, or SBA lending options with high level detail on where each may be a preferred solution. My cell is###-###-#### , email is redacted or you are welcome to schedule directly via my calendly: https://calendly.com/bturner-thebancorp/45min
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