Financing low asset / security SMB acquisitions

I am working on a deal we are about to go under LOI on that is a small <$1M revenue, $350k FCF business. The business has less than $25k in assets, and when I met with our banking partner on Friday they expressed concern over the “air ball” or how much of their loan would carry no collateral.

This surprised me as many SMB acquisitions come with significant security and assets. As well as the strong history and cash flow of the business, and the fact that this bank has financed a few other deals for us in the past.

My partner and I already have our homes used as collateral on a previous acquisition that is going very well. So while I understand the concept and concern of a high “air ball” I was surprised as this deal felt like one that would be easy to finance.

We intend to use the SBA 7a program and will now be shopping the deal to other lenders.

Any outside feedback and perspective would be appreciated.