Seeking Advice on Financing for a Specific Deal

Hi everyone,

I’m currently evaluating a specific deal. I know the owner personally and essentially have the first right of refusal. The business generates $1MM in SDE, and I’m trying to determine the best way to structure the financing.

I don’t have the multiple six figures it would take to purchase this business through SBA, but I’ll be damned if I don’t figure out how to make this happen. I may not have an MBA, but I’m determined to find a win/win situation for myself and the seller, as well as the right path to structure this deal and create a positive impact for my family and community.

I’ve read and been given varying answers to the questions below, so I wanted to tap into the collective wisdom of this community:

1. 1) Equity Injection: Is it possible to raise the 10% equity injection from investors? (I’ve heard it’s not preferred but not necessarily a “no.” If so, where have you had success finding these investors?)

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  2) Asset-Based Lending for Equity Injection: The business is heavy equipment asset-heavy, can I use an asset-based loan to fund the SBA equity injection?
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  3) Seller’s Note as Equity Injection: I’ve heard of deals where a seller’s note covers the equity injection requirement. Is this accurate, and under what conditions is it typically allowed?

4. 4) Equity Injection Requirements with Industry Experience: If I am able to purchase a 20%+ equity stake in the business, can I purchase the remaining ownership later without needing additional money down? What is the timeline for this, if so?

• I’d definitely be open to connecting with anyone who has successfully completed a deal like this. Thank you in advance!