Financing that doesn't require collateral

September 11, 2021

by a searcher in Nashville, TN, USA

I'm looking for an acquisition doing >800k EBITDA. I've been looking into financing options but most of what I've seen is going to require I put my real estate up against the loan as collateral. What are others doing to get around this? Are there financing options that won't require my personal property?

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Reply by a searcher
from Rice University in Tampa, FL, USA

Adam, I'm not sure if you are talking about SBA financing or other forms. With SBA, there are two types of lenders: portfolio and cash flow. Portfolio are your traditional banks that will ask for lots of collateral (yours, if the firm you are buying lacks it). Cash flow are typically non-bank lenders that sell off the loan shortly after closing. Their requirements are much less stringent, but the rates/fees are higher. I found that working with a well-connected lending broker in your area is worth the extra fees, if you don't relish separately interviewing dozens of lending institutions.

Reply by a lender
from The University of Chicago in Schaumburg, IL, USA

The SBA 7(a) produce is a great cash flow financing tool. However, if RE that you own has equity of 25% or more of its value, we SBA lenders are generally obligated to take a lien on it If that does not work for you, as Elliott suggested, try SG Capital (John Todd in the Midwest). Double digit interest rates and more equity in the business required than SBA loans but, usually, no personal guarantees.

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