Combining SBIC and SBA (b/t Independent Sponsor and Search Fund)

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by a searcher from Columbia University - Columbia Business School
in Jacksonville, FL, USA

1yr ago

Combining SBIC and SBA (b/t Independent Sponsor and Search Fund)

I am a little tired of always going to the SBA. I have had SBA loans before, but I'm on the wrong side of 50 to personally guarantee everything under the sun. While I would do it again, I'm looking at $1-$3M in EBITDA and wondering if I can do a partial SBA and partial SBIC loan, so I can limit my exposure while getting some of the lower-priced debt that SBA offers. Has anyone ever done this?

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reply by a lender 1yr ago
in Falmouth, MA, USA

This is an uncommon structure, and it’s unlikely SBIC will join as junior. If they do, it will significantly increase the weighted average cost of capital. The options are either SBA for the right candidate or private credit. I’d be happy to discuss further. Email: redacted

reply by a searcher 1yr ago
from Bentley University in Exeter, NH 03833, USA

SBIC also has to be "out" at a certain point/time horizon, and tends to take a position that is a combination of debt (protection and preferred return) and warrants/options (for the upside). Depending on the type of company and deal size an SBIC is unlikely to be interested. ... now if you or a friend happened to run the SBIC, so you got to direct/invest the capital, then you could be on to something...