Plumbing business - SBA/Other financing

March 06, 2025

by a professional from University of Wisconsin - Madison in Green Bay, WI, USA

Close to having a plumbing business under LOI. Owner is only willing to roll around 10% but is willing to carry the license for the next two years. My understanding is for an SBA loan it is likely required for him to roll 20% and also guarantee 20% of the loan. Is this correct. Has anyone else dealt with this? Have a small add-on behind it working on as well to get to approximately $700k of SDE with needing to hire a GM to replace owners.

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

We would be happy to take a look and see if we can provide you with assistance. We have done many deals where the seller is retaining equity and maintaining the license. The seller is not required by the SBA or lender to retain a certain amount of equity to maintain the license. The only way you need to worry about the amount of equity they retain is if there is a state rule requiring the license holder to own a certain portion of the company. In fact you want to keep the license holder below 20% so they are not required to sign a personal guarantee. From time to time some lenders might want the seller to sign a limited personal guarantee to the equity interest they retain if the lender is worried about future management experience, but this is rare. I just always warn people up front it is possible.

I would be happy to discuss options with you at any time here or directly at redacted

Reply by a lender
from University of Southern California in Los Angeles, CA, USA

The SBA does not require the seller to roll 20% into the deal. In fact, if the seller rolls 20% then they will have to provide a PG on the loan which most sellers will not want to do. I recently did 3 home service deals in HVAC and roofing and the seller only rolled 5% into the deal and provided the license as well. I’d love to help you find the right SBA lender for this deal.

We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. You can reach me here or directly at redacted You can also click here to schedule a meeting with me: https://cal.com/ishan-jetley-3d73m8/30min. Look forward to chatting!

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