Debt Financing Options at $1M EBITDA?

searcher profile

October 18, 2024

by a searcher from Arizona State University - W. P. Carey School of Business in Alameda, CA, USA

Having initial conversations with a $1M ebitda long-standing business, likely price of $2.5M and I'll put $500-1M cash upfront. I'd like to line up options for financing aside from SBA in order to move quickly when/if the time comes. I've heard there's a lower bound of when a commercial bank would be interested in lending, but unsure of that minimum. Also, I know there are newer/alternative providers of debt financing.

What are the top few options I can be lining up to be ready / compare?

Thank you for any guidance!

4
37
422
Replies
37
commentor profile
Reply by a searcher
from Massachusetts Institute of Technology in Apex, NC, USA
The big commercial banks - typically want 20MM revenue to enter their "commercial banking' or tons of VC funding. Guru/Asana have commercial banking relationships. When you enter small business land, banks "hate" you. Longer explanation for that but you're not very profitable, you're harder to sell (realize collateral) etc. Some decent regional banks but in the Bay Area you're still going to be "small." You're going to be in SBA land if you want it to be affordable (also more expensive than commercial), or you can probably find some mezzanine "alt" lender that will lend if speed is issue esp if you have personal assets.
Rec: Work with SBA broker on here to find bank that likes the space you're buying and can river guide for you. It is easy enough to do yourself, but you probably get a slightly better outcome if you use someone to help.
commentor profile
Reply by an intermediary
in New York, NY, USA
Thanks for the tag ^redacted‌.

Hi Justin, the best bet for a $2m loan for a $1m EBITDA company will be SBA lenders. Unless there are some red flags I'm not aware of, you should get many interested groups.

However if the time factor is the most important thing, there are some other private credit groups / mezz funds that can move much faster than SBA lenders, but would be more expensive, likely 4-6 points higher all-in, although they can also be more flexible re: terms, amortization, deferred interest, etc.

We have 50+ of the top SBA lenders plus dozens of private credit and mezz funds on our CapFlow platform. If you'd like to discuss further, you can set a call at capflow.net or drop me a line at redacted
commentor profile
+35 more replies.
Join the discussion