Financing a niche company

August 22, 2024
by a searcher from Duke University - The Fuqua School of Business in Denver, CO, USA
I came across an interesting opportunity, but the broker was hesitant on a deal contingent on bank financing (specifically mentioned SBA). I think it was partly due to this being a service-oriented business in a niche space where banks don't have a background in dealing with this type of company. It's been around for decades and last 5 years have been quite consistent (growing low-single digits) with healthy margins.
Is it more about finding the right SBA bank (SBA + conventional since over $5m) or with these very niche industries, what would be another way? The seller wants something stronger than a preliminary approval (tax records match P&L, the operating structure is quite simple with very little addbacks outside of salary).
Rough numbers: price $9M, $1m rollover, $2m equity, so financing the $6m.