CD Secured Term Loan

investor profile

April 20, 2025

by an investor from Yale University in Miami, FL, USA

Have a small add-on acquisition opportunity. Because of new regulations, we can't access SBA debt (partner is non-US citizen). Lender has offered us a CD Secured loan, with amount loaned tied to amount invested. Because the deal is small, this would allow us to use debt to finance acquisition. Does anyone have experience with this? Things to watch out for? Besides having cash tied up, etc.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
In essence you are self-funding your deal by putting cash in the Bank. The only real benefit is it leaves your cash in place and growing, but you are now paying interest on the acquisition loan. But the interest on CD secured loans is usually pretty low. I hope this helps.
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