Valuations & Deal Structure

January 21, 2023
by a searcher from East Carolina University - College of Business in Raleigh, NC, USA
Quite new to the smba space, but I am currently in tech doing business analysis consulting and project management.
I have a general understanding of using SBA loans to acquire businesses, but I would love to get more detail on how they’re structured based on business valuations.
Any people and/or resources that can help me get a lower level view on this?
from California State Polytechnic University in Pomona, CA, USA
EBITDA/SDE x Valuation Multiple x 0.9 = Total Possible 7A SBA Loan Amount ($5.0M Max)
EBITDA/SDE x Valuation Multiple x 0.1 = Equity Required (from buyer, seller note, investors)
EBITDA/SDE x Valuation Multiple x 0.05 = Max Equity from Seller Note applical to minimum total equity
EBITDA/SDE / 12 mos loan payments = DSCR, of which, with current interest rates you probably need to target a Valuation Multiple under 4.5x to hit the proper DSCR that most bank have set (can be 1.25 to 1.50 depending on bank).
The Live Oak Bank office hours are a great resource for learing all about this in detail and receiving some valuable modeling tools for more in depth accounting of this!
from University of Colorado at Boulder in Austin, TX, USA
Here is the link to the recording
https://liveoakbank.zoom.us/rec/play/ahWgbc8buUHLePIQNUhHzDabsE3PhEjuMBLk27LHeluTgMdqmliP1dhcSvRgKypjmkPR_hfrfEgT9Gmk.3bJc9H-H2H4zhezo?continueMode=true&_x_zm_rtaid=MT2hrUJjSveO1cwruOwkZw###-###-#### e825845b01c8f181876314cfcaba3e41&_x_zm_rhtaid=637
.