Avoiding personal guarantees for bank loans?

by a searcher from The University of Chicago - Booth School of Business

4 years ago

I am new to the search fund space, but my partner and I are looking to buy a service company $5M in annual revenue $1M in cash flow.  Looking at 4-year loan pay-back period.  So far banks require a Personal Guaranty.    Are there lenders who will loan against solid equity contribution and strong cash flow?

3 likes
403 views
9 comments

investor from University of California, Berkeley - Haas School of Business

There are definitely bank lenders willing to provide non-recourse financing to experienced operators/sponsors for companies with a history of profitability and recurring revenues. Financing typically up to 35-40% of purchase price with ~ 5% interest rates. No PG needed, but this only works for high quality companies and requires significant cash equity investment.

3 years ago | like reply | 0 likes

searcher from University of Texas at Austin

SBA requires PG on any available personal assets, specifically your home. No bank that is underwriting SBA loans is going to deviate from that requirement. If PG is not an option, then technically SBA is not an option.

3 years ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Family office looking for traditional searchers

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Downsides of "buying a job" below 750k+ EBITDA?

6-7x for a Self-funded Search Deal?

Examples of self-funded searcher websites

Self Funded Acquisition: A few Things I Learned

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.