Did lender options in the UK constrain your target criteria?

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August 30, 2022

by a searcher from University of Southampton in London, UK

I'm wondering if/how the target criteria of UK searchers ended up being constrained due to what lenders are willing to fund in the UK.

In the absence of something equivalent to the SBA, alternative debt providers seem to either require reliable assets to back any loans (buildings, machinery, receivables, etc.) or have high-thresholds for cash flow based lending, such as 30% minimum equity.

Has this been the experience of other UK searchers? Did this constrain your criteria such that you had to either target heavily asset-based businesses or reduce your target SDE (thus the equity you had to come up with) if you wanted a business in a more asset-light industry?

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Reply by a searcher
in United Kingdom
It can be a challenge. Alternative lenders all seem to have different criteria. I would urge you not to reduce your target SDE for asset-light businesses with the goal to reduce the nominal equity check, because most cash flow lenders will not lend below £1m (there are a few exceptions)
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