How to finance SaaS with SBA

by a searcher from Columbia University - Columbia Business School

9 months ago

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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8 comments

searcher from University of Mississippi

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.

9 months ago | like reply | 2 likes

searcher from University of Edinburgh

Came across a few instances where this has been done (e.g. https://acquiringminds.co/articles/andrew-swiler-lanteria), 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.

9 months ago | like reply | 1 like

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