Non-SBA Cashflow Lenders for Smaller Deals?

November 19, 2020

by a searcher from Texas A&M University in San Antonio, TX, USA

Are there any unitranche lenders, private credit funds, or individuals willing to provide 1.0 turn of EBITDA as senior debt for a small acquisition ($500k - $1m EBITDA)?

Over the last six months I've seen several simple, well established, and highly profitable small business get scooped up by cash buyers at very low multiples because SBA financing was ruled out and other options for small cashflow-based acquisition loans don't seem to exist. A typical example would be an asset-light service business with $500k-$750k in EBITDA selling for###-###-#### 0x TTM earnings. Reasons for not accepting SBA-based offers have included a health crisis and desire to close in 30 days, a seller with a cash offer unwilling to wait on SBA, egregious (but verifiable) add-backs, a strong desire by the seller to remain part-time, etc.

I would be willing to provide a PG and independent QoE. No issue with higher rates, a short term, or cashflow sweep covenants. DSCR over 2.5, likely over 3.0.

Would love to talk to any lenders interested in discussing this type of deal!

Reply by a searcher
from London Business School in London, UK

Hi Nate, I was wondering if institutation might not be interested by family offices could step in. For example, if you had a network of family offices you have introduced yourself to prior to finding the target you could then come back and bring them into the deal as both an equity holder and a debt-like holder. It is just an idea.

Reply by a lender
from Florida Atlantic University in Port St. Lucie, FL, USA

Hi Nate...we can get creative here so you can be prepared for these types of deals on an ongoing basis. Feel free to reach out redacted with a few days and times that work for a zoom call to discuss.

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