SBA vs. SBIC Lenders

searcher profile

June 21, 2023

by a searcher from Indiana University, Bloomington/Indianapolis - Kelley School of Business in New York, NY, USA

Hi All - just launching my search and thinking through leverage and financing partners on transactions. Deals in the $1-3M EBITDA range seemingly could fit both the SBIC lender profile as well as SBA 7a profile. There seem to be some positives and negatives of each. For example, SBA 7a offers increase leverage and likely at lower rates, but with a personal guarantee. An SBIC can provide credit (plus a portion or potentially all of the credit), but seemingly may have stricter covenants than an SBA loan. There's also the question of what kind of economics a searcher will get in either scenario.

How have other searchers weighed the pros/cons of partnering with an SBIC lender versus an SBA 7a lender?

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commentor profile
Reply by a searcher
from University of Pennsylvania in Miami, FL, USA
Generally, SBIC debt ($2.5/$3M EBITDA) begins where SBA debt ends ( up to $2.5M EBITDA). Might be some slight overlap but not really competitive.
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Reply by a searcher
from The University of Chicago in Dallas, TX, USA
Following here - would love to know more about SBIC
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