SBA lenders and customer concentration

August 09, 2021

by an investor from University of California, Berkeley - Haas School of Business in San Francisco Bay Area, CA, USA

Are there any SBA lenders who may be able to get comfortable with high customer concentration (80%)? We believe the actual concentration risk is relatively low given the customer's project pipeline and the general demand for the company's services. It is an attractive deal at ~ 2x EBITDA.

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Reply by a searcher
in Highlands Ranch, CO, USA

There are banks out there that will take on higher risk or more creative structures (obviously within the guidelines of SBA requirements). If you have something like this you will probably save time working with an SBA specialist broker, rather than direct with banks. They will have more of a national network and know what lenders would be better fits for this kind of deal. I've talked to these guys and been very impressed with their knowledge and ability to find SBA lenders https://www.multifunding.com. They are not paid by you directly, they get a commission back from the lender when the deal closes. They can also be good to bounce ideas off of since they are a 3rd party not affiliated with any lender so you can be more open with them in a way you may not want to be with the bank. But do know your fees and interest rate might be a little higher with these types of lenders than if you didn't have these risk factors. Also, of course, with higher risk deals know they will most likely look more closely at your collateral (like your home equity).

Reply by a lender
from Nova Southeastern University in Fort Lauderdale, FL, USA

I just had a deal approved with concentration risk. Please feel free to reach out to me Tom. redacted

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