How to finance SaaS with SBA

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by a searcher from Columbia University - Columbia Business School
in Washington, DC, USA

2yrs ago

How to finance SaaS with SBA

Hi all,

I'm working on a sub-scale SaaS deal with 60% CAGR over recent years.

Seller and I have agreed on a price of 3x ARR. TTM SDE is ~$900k.

Given the growth, DSCR from prior year(s) looks terrible.

Thoughts on how to finance (preferably with SBA)?

Best,
David

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reply by a searcher 2yrs ago
from University of Edinburgh in Singapore

Came across a few instances where this has been done (e.g. redacted), but generally agree that it'll be challenging to procure an SBA loan for SaaS companies with that profile (high growth, low or negative profitability, limited track record, etc.). I would suggest looking into venture debt and revenue-based financing options.

reply by a searcher 2yrs ago
from University of Mississippi in Atlanta, GA, USA

Sounds like a nice business. Maybe you could lower the SBA amount and bring in some value-add investors in a more typically self-funded search scenario?

Outside of DSCR, the timeline on SBA loans can also present a challenge since the sellers is likely getting inbound from other buyers that can close fast.