Lenders Comfortable with New Construction Businesses?

by a searcher from University of Texas at Austin

3 months ago

Update: I got connected with a few different lenders, happy to refer others if they have a similar need/pushback. 

I'm under LOI on a business where 85% of the revenue comes from residential builders with about 30% customer concentration. 

It has solid growth, the customer mix is improving, and I have industry experience.

High level, it does $1mm+ in ebitda on $6-7mm in revenue (on track for $8mm+ this year) and we're looking for a $4mm SBA loan (inclusive of working capital and deal fees). 

Can anyone recommend lenders that are comfortable with a deal with this much new construction exposure?

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3 comments

lender from Eastern Illinois University

We are a Commercial Loan Brokerage shop with over 500 funding partners and over 60 SBA funding partners. We have done construction and construction service companies in the past and definitely have lenders that would be interested. You can reach me here or directly at --@----.com

3 months ago | like reply | 2 likes

intermediary from Southern Methodist University

Construction is and always will be cyclical. I’m not sure exactly what you mean by “30% customer concentration” but you should be extremely cautious here. Buyers are avoiding these types of end markets like the plague unless there is some sort of mitigating factor that I’m not aware of.

I would become intimately familiar with the outlook for construction in their markets. Remember, there’s always a reason that a business is for sale and often it’s not a good one.

3 months ago | like reply | 1 like

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