Don't take the Guaranty personally

by a lender from Saint Joseph's University - Erivan K. Haub School of Business

4 months ago

A theme I see on here quite a bit is the idea that the primary difference between SBA and non-SBA (or conventional) financing is that SBA requires a personal guaranty.  A good idea is to assume you'll be required to provide that in either case.  Because if you won't stand behind the loan, why should the bank?

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intermediary from The University of Chicago - Booth School of Business

Example of a non-SBA loan. We had two buyers make an offer of $17 M on a business at 5x. One was an individual first-time buyer with deep industry and management experience. The other buyer a funded PE firm with $100 M raised capital. Both buyers happen to talk to the same bank. Equity infusion was 40%. The bank wanted PG from the individual buyer, not from the PE buyer. The reason by the bank: PE firm's GPs have gone through extensive personal DD by the LPs. LPs have trusted the GPS with $100 M (exaggerating but GPs can with draw $100 M and disappear before the LPs find that they withdrew the money). The bank does not need more assurance (and won't get it anyway).

3 months ago | like reply | 1 like

intermediary from Boise State University

Read ^Searchfunder member‌ response above in this post.

3 months ago | like reply | 0 likes

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