Avoiding personal guarantees for bank loans?

by a searcher from The University of Chicago - Booth School of Business

4 years ago

I am new to the search fund space, but my partner and I are looking to buy a service company $5M in annual revenue $1M in cash flow.  Looking at 4-year loan pay-back period.  So far banks require a Personal Guaranty.    Are there lenders who will loan against solid equity contribution and strong cash flow?

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investor from University of California, Berkeley - Haas School of Business

There are definitely bank lenders willing to provide non-recourse financing to experienced operators/sponsors for companies with a history of profitability and recurring revenues. Financing typically up to 35-40% of purchase price with ~ 5% interest rates. No PG needed, but this only works for high quality companies and requires significant cash equity investment.

3 years ago | like reply | 0 likes

searcher from University of Texas at Austin

SBA requires PG on any available personal assets, specifically your home. No bank that is underwriting SBA loans is going to deviate from that requirement. If PG is not an option, then technically SBA is not an option.

3 years ago | like reply | 0 likes

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