How can I get acquire a business without putting my house up as collateral?

January 19, 2025

by a searcher from University of Kansas - School of Business in Mt Pleasant, SC, USA

Background: I'm a 38 year old sales professional with 2 kids and a paid off my house. Business Management degree from University of Kansas. I'm interested in finding and purchasing a business that can benefit from a new sales strategy or team. My wife (understandably) is not onboard with putting our house up as collateral (personal guarantee /SBA). I currently have about $150k to invest upfront. Would like a business in the $350-700K SDE range. Not willing to relocate, Not particular interested in a search fund.

Question 1 : How best can I accomplish this goal and buy a business without a personal guarantee? Is there any banks recommend? Am I restricted to seller finance only?

Question 2 : Any courses would recommend for someone just starting? Best books?

2 Likes

15 Replies

284 Views

Replies

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Unfortunately if you choose to go the SBA route, the SBA requires them to take the home if you have 25% or more equity in the home. You can take out a home equity loan to reduce the equity below the 25%. Even if that home equity loan is not drawn upon, because it is there the equity is not available. But outside of that if you choose to go the SBA route you will not really have any options. The only way you can get away without the home being required to be pledged is if you do a loan under $500,000 on the SBA Express loan program, which you can now use for business acquisitions. The pledge of the home is not a mandatory requirement under that program. However, if you have your home owned free and clear of any mortgages, it is highly likely credit at a lender would require the home to be pledged as additional collateral to help secure the loan. For the size transaction you are talking about, it is really too small for non-bank lenders and even for Bank lenders, due to the size you would be in small business banking and they typically do not fund goodwill deals without a government guarantee.

Happy to have a discussion and go through options to try and protect yourself. You can reach me here or directly at redacted

Reply by a lender
in Ponte Vedra Beach, FL 32082, USA

Good day, I specialize in SBA & USDA lending, there are ways to search for businesses to acquire which can offer loans structures that are fully secured and do not require the primary residence be used as collateral. It does require a different approach to your search, but I have financed a few of these acquisitions. There is not an option to avoid the personal guarantee. I would be happy to have a call together to discuss, my cell is###-###-#### , my email is redacted or you are welcome to schedule directly via my Calendly below. ^redacted‌ let's hop on a quick call together so I can share the approach I have helped other searchers take to not have a need to use their primary residence.

https://calendly.com/bturner-thebancorp/45min

+13 more replies.

Join the discussion