Business Acquisition
When an already established and successful business has the opportunity to expand due to increased demand for their product the SBA 7(a) program is available to finance the expansion of the business so it can meet the needs of the market. An example can be a competitor leaving the market, existing customer’s awarding larger contracts, or the addition of a related product line. The key is that this business is already successful but faces and opportunity to make the business more successful but needs additional capitalization to support the expansion.
- Established Successful Business
- Minimal down payment – 10% to 20%
- Direct Industry Experience is required
- Floating or fixed interest rate
- 10 Year Term – fully amortized
- Seller Carry Back Loans Allowed
- Partner Buy-Outs
- Loans up to $2,000,000
- Approval Time: 5-10 Days
- Closing Time: 30-45 Days
Loans for this purpose can generally not be obtained thru conventional lending channels. If they are available they are generally short terms and several covenants required to be maintained during the term of the loan. In many cases the business will be relying on expected future income from making the expansion and these projections can be used under the SBA 7(A) program in making the credit decision. The SBA 7(A) program provides greater flexibility allowing the borrower to preserve working capital and cash flow by minimizing down payments – as low as 10%, and allowing full amortization for 10 years.
