non-SBA lending on $1.2M top line 50% SDE highly sticky niche SaaS

January 29, 2020

by a searcher from Georgetown University - The McDonough School of Business in Bettendorf, IA, USA

I'm trying to figure out how to get leverage on a very small, highly niche but super sticky customer subscription SaaS play. For a few reasons, I'd like to keep the founder involved with some equity so SBA is out as an option. Also, this is at auction with multiple offers so high seller financing isn't going to work. Since it's software, there's no assets to lend against. Asking $2M.

ideas? Anyone know players that are willing to lend at those levels and/or some combination of debt + equity for a non-control situation?

Reply by an investor
from Thomas A. Edison State College in San Juan, Puerto Rico

You can do SBA. Buy 100% of the company and give him stock options/equity grant the day after closing.. This gets around the SBA 100% change of control requirement. Email me if you have any other structuring questions, I've done several SBA loans for my own acquisitions and know all the structuring loopholes. redacted

Reply by a searcher
from University of Pennsylvania in Indianapolis, IN, USA

Michael - You might give SuperGFunding.com a call. Jon Engleking may be able to help out as they are a cash flow lender and like the SaaS space. Their rates are somewhere between prime and subprime, but it could help you get the deal done.

Best,
Jason

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