Loan against AR

by a searcher

2 years ago

I am negotiating to purchase a business which has $1M in AR and I am wondering whether it is possible to use the AR as colateral in the capital stack in order to reduce the equity I will need to provide?

Are there lenders who would see this as my "skin in the game"?

1 like
101 views
8 comments

searcher from Texas A&M University

Is any AR overdue by more than 90 days? What are the original terms (net 30, etc)?

Factoring less good than LOC if you can get it.

2 years ago | like reply | 0 likes

lender from Baylor University - Hankamer School of Business

Very unlikely. I'd talk to a traditional lender about taking on the Term Loan, and then seek out a private lender (or ABL) about factoring the AR (up to 85% AR). If you go the SBA 7a route, you might be able to get by with 10% cash at close, depending on the credit quality of the company. Best of luck!

2 years ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Self Funded Acquisition: A few Things I Learned

Examples of self-funded searcher websites

2 Best Ways To Find Motivated Sellers, Off-Market Deals

6-7x for a Self-funded Search Deal?

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.