Financing Tuck-ins After Hitting SBA Limits – What Are the Options?

searcher profile

April 15, 2025

by a searcher in New York, NY, USA

Hi all, For those pursuing a roll-up strategy using SBA 7(a) loans: once you’ve maxed out the SBA debt, how do you typically debt finance tuck-in acquisitions beyond that point? • Can you raise conventional senior debt behind the SBA loan? • If so, what are typical terms for that conventional debt (interest rates, amortization, maturity, personal guarantees)? • Which banks do this type of lending? • I’ve heard some mention refinancing into all conventional debt once total debt reaches ~$10MM or EBITDA reaches $3 million. Is that the case? What's typical maximum leverage at that point? • More broadly, how do folks generally finance M&A in that $5MM to $10MM debt range? Would love to hear from those who’ve navigated this, especially anyone who has transitioned from SBA to conventional financing mid-rollup. Thanks in advance.
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commentor profile
Reply by a professional
from The University of Texas at Austin in Dallas, TX, USA
This is precisely the type of deal that we bank in the LMM and where we can be helpful. There is a gap in funding between $2M-$4M of EBITDA, and we do a great job filling that gap with debt and equity. Happy to have a conversation - redacted
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I would be happy to have a discussion on this topic. We have helped other clients secure debt beyond the SBA limits for roll-ups. There is a lot to cover though, so hard to provide an answer all in one post. But there are conventional banks as well as non-bank lenders that will support that kind of growth. The financing terms are not as strong as what the SBA offers, which is why most buyers trying to maximize what they can buy on their own because you will typically need additional equity to fund future growth and it is always cheaper and easier to bring additional equity in when you have a larger platform to start. You can reach me here or directly at redacted
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