Structuring an Acquisition with SBA 7(a) and ABL

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by a searcher from Washington State University - Carson College of Business
in Seattle, WA, USA

2h ago

Structuring an Acquisition with SBA 7(a) and ABL

I’m looking to acquire a company with substantial hard assets. My plan is to use an SBA 7a loan for the acquisition with an asset-based lending (ABL) facility secured by the company’s inventory and accounts receivable to help complete the transaction. Has anyone here structured a deal this way? A few questions: * How does the SBA typically underwrite transactions that also include an ABL facility? * Are there any common pitfalls or lender concerns I should be aware of? Any help with this would be much appreciated!

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reply by a lender 2h ago
from University of Missouri in Denver, CO, USA

I think you will likely be fine to carve out A/R and inventory as long as they don't file a blanket lien.

reply by a searcher 1h ago
from Lehigh Univervsity in Providence, RI, USA

The person above who commented is at a bank so they may have some more experience on SBAs & ABLs. However, negotiating an intercreditor agreement is no small task and though in theory you could bifricate it, I don't know many traditional banks or the SBA that isn't going to want to be in the first position on all assets, especially in the SMB space