Addressing the ‘don’t have experience’ concern with lender
February 27, 2023
by a searcher from California State University, Long Beach in Las Vegas, NV, USA
So LOI accepted on my first acquisition (hooray!) this past week. Spoke to a lender already and she asked “Why this business if you have no experience or expertise in it?”
How have y’all addressed this and what is the lender looking for in an answer?
Thx
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
1) Highlight relatable business experience to the subject business. Often times there are things you have done in your past that are relatable. Those things can go all the way to an earlier career if need be.
2) Put together a strong transition plan to explain the process of taking over the business.
3) Have a strong team with board members with experience that are willing to get their hands dirty working in the company some if you need the help.
4) Be sure you understand the role the seller has and what they do day-to-day thoroughly. Explain what experience you have and how you can take that roll over. Be sure you can detail that out (also good to have in the transition plan).
5) Strengthen the deal with a larger seller note or some additional equity to take some of the risk off the table for the lender with experience concerns.
I rarely see deals not move forward because of experience. Some SBA lenders are harder about past experience then others. Again, if you can provide support for the items above usually their is a path to get a deal done. I am happy to discuss directly at any time. You can ping me here or reach me directly at redacted We are a Commercial Loan Brokerage shop with over 500 funding partners and over 50 on the SBA lending side, so we can present many options. It is important to know which lenders are more aggressive if you are pushing the limits on relatable experience.
from Villanova University in West Chester, PA, USA