What does the debt FEEL like?

March 18, 2026

by a searcher from Harvard University - Harvard Business School in Los Angeles, CA, USA

Anyone who pursues search has to get comfortable with the debt (bank debt, seller note), often times an SBA loan. For those who have closed on deals and are now operating, how does the debt "feel" and compare to your expectations going into your search? I have a mortgage, but I imagine having a large business loan to service feels different.

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Reply by a searcher
from Harvard University in Calgary, AB, Canada

This is a great questions @redacted‌! The difference between business debt and mortgage debt is that you could 'brute force' a mortgage. Eat ramen, cut all expenses, get 3 jobs, and you could find a way to make payments. The same isn't true on a business loan that takes $100k / month. At most leverage levels, you're nervous about making payments every single month, especially if you undercapitalized the acquisition. On the bright side, this forces you to be very disciplined with cash. On the downside, cash management is mentally draining and distracts you from pursuing the growth opportunities that attracted you to the business in the first place. There are no silver bullets. Overcapitalizing is expensive since it's at equity rates, missing growth opportunities or defaulting on loans is also expensive. If it was easy, everyone would do it.

Reply by an investor
from Harvard University in Dallas, TX, USA

Jim sharpe told me, when i already had a personal guarantee on 4m that I should be realistic about it and that equity is emotional and debt isnt . Reframed my perspective and I personally guaranteed 18m. Id been running the business for more than 5 years at this point. The initial debt I guaranteed and got nothing from the investors for doing. So at that point I kind of thought they were more responsible than they were. If you're bankrupt with 4m or 400m its the same......you cant be a little bit bankrupt. I did lose some nights sleep at time. But not anything like dealing with emotional investors. When covid hit I had 12m outstanding and at that point we were about 1x. I still worried. So made a plan and went to the bank head of underwriting and said.....OK is this a plan. He told me, if we get to you, 90% of the clients went bust and the bank is long gone. He then told me why they wanted a personal guarantee. So that I couldn't just walk away if things went wrong. And that they used it to negotiate a deal to work hard to get them as good an exit as they can. So the bank doesnt want to make anyone bankrupt and a good relationship with them is non emotionally, clear and specific. It felt different than I thought it would.

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