Self- funded searcher exploring raising equity

May 10, 2023

by a searcher from Columbia University - Columbia Business School in New York, NY, USA

Hi all,

For the most part my search has focused on opportunities that are SBA eligible; however, I am seriously considering raising equity instead. Out of curiosity, how did you all determine which path would be best for you?

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Reply by a lender
from Clemson University in Reston, VA, USA

Having been through this as an entrepreneur andd SC a banker I can tell you that it’s mostly a choice of what you are willing to give up. I’d exhaust your resources first. If you have a 401k you can withdraw or borrow against it to get some equity in, ask family and friends first. Then go a sub debt route as that acts as equity but you can still subordinate them when flooring for financing from a traditional lender. If the company you are buying has good cash flow look at a mezzanine lender if the traditional banks can’t get comfortable. Or reach out to me directly I’m sure I can point you in the right direction. redacted

Reply by a searcher
from Florida Institute of Technology in Denver, CO, USA

New searcher, excuse me. I have the same problem, the I traditional banks seems to be looking at only the cashflow- I currently have and not the future businesses cashflow which makes a huge difference. They mentioned as a new owner we dont have the knowledge of how you are going to run the company so we dont consider future businesses csshflow. They also mentioned that there are lenders who look at future csshflow of businesses, so my next stop is them after I hear back from the bank on the ball park of my loan qualification numbers.

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