Refinancing Existing SBA Loan with Commercial Loan (<$1.5mm)
July 23, 2024
by a searcher from Princeton University in Annandale, Clinton Township, NJ, USA
I am 3.5 years post acquisition (water treatment space), and I'm exploring commercial business loans to refinance my existing SBA loan. I've heard that certain commercial lenders may be able to offer more competitive rates than SBA lenders (for the the right business!) for loans under $1.5mm. Can any lenders on this platform shine some light on this? Or are there any other operators that have had success refinancing with commercial cash flow lenders?
The refinancing would be in the $1.4mm range. Primary goals with a refinancing would be to 1) lower rates and 2) free up monthly cash flow for growth investments, and 3) add a revolving line of credit to my cap structure to add flexibility.
All feedback appreciated!
from University of Virginia in Charlottesville, VA, USA
It's definitely good to get terms sheets from multiple banks. In addition to rates, try to negotiate on terms like the size of a revolving line of credit, amortization period, etc.
Here is what has worked for me in the past:
- Go on Google maps in the area near your business, look for banks with branch locations in that general area
- Reach out to 5-10+ of those banks and ask to speak with their commercial lenders. I'd expect that 3/5 banks you reach out to will generate a meaningful convo.
- Usually these convos start as pretty relational. The banker wants to learn about you, what you're building, establish a relationship. But you still need that EBITDA coverage to get serious.
- Banks tend to focus on either industry or geography. The above strategy is a good way to find bankers who are trying to do more business in your local area, will look at your just because you're in the same state/city
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA