Financing for Services Businesses

by an member from Vanderbilt University

1 year ago

Hey guys,

I am thinking doing some thinking on what the capital structure might look like for a business / consumer services company that is doing US$5 mm in EBITDA and has an Enterprise Value of roughly US$15-20 mm. 

From a debt perspective, what are people using to get to 50-60% leverage? Are regular bank loans available? I am assuming it is difficult to collateralize given low fixed assets and not sure how receptive banks would be to this. Is SBA financing the only real route?

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searcher from Northwestern University - Kellogg School of Management

This is too general of a question. Business services and consumer are very different and quality of revenue can vary widely within that group. A company that has 5 year contracts is different than mostly project based work etc... Better to evaluate when you really choose an industry or better yet have a deal. ~2x leverage is pretty common for cash flow lending to established small businesses as a broad generalization, but will move up or down depending on a lot of factors.

1 year ago | like reply | 0 likes

lender from Eastern Illinois University

We are a Commercial Loan Brokerage Shop with over 500 funding partners including SBA, conventional, and non-bank lenders for business acquisitions. Happy to have a conversation. You can ping me here or directly at --@----.com Good luck.

1 year ago | like reply | 0 likes

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