NON-SBA... LENDERS AND RATES?
I'm looking at a majority-partner buyout. The other partner will stay on.
This isn't generally an SBA financeable scenario, so I'm exploring other options for debt. Cash flow is sufficient to cover, and the core of the company is very solid.
EBITDA of the portion to be purchased is just over $1m.
1. Who is lending in this range?
2. What interest rate or terms should I expect with non SBA financing?
I'd be curious what others say but my sense from past readings and talking to folks:
-2m+ EBIDTA businesses there's a range of options - lots of the banks that active in search community do these deals without using SBA, SBIC lenders, etc
-Sub-2m EBIDTA deals it can be hard for debt to finance an acquisition other than SBA.
-Sub 2M EBIDTA and debt related to running a business (not finance an acquisition), there's a lot of options.
Above $2M of EBITDA: Many non-bank lenders that are savvy and are familiar funding institutional lower middle market leveraged buyouts. Rates are higher than SBA but this group can be creative on structure. Less issue with earnouts, partial buyouts, guarantees, etc.
Below $2M of EBITDA: I'd add that it's extra-hard outside of SBA if you have no physical assets or real estate (for example, a software or consulting business). Local banks really seem to want asset coverage.
5-7 year note, interest a little higher than government guaranteed. It's not going to be as good as SBA, but if it's your only option, it should be workable.
I would love to hear opposite view, especially from someone I know and respect, Lisa Forrest.
Things get a lot trickier if you are trying to finance at the HoldCo level, while owning only a portion of OpCo. It is still doable, but more difficult and requires very good legal document drafting and a lender who is familiar with the structure.
If the HQ is in a yellow or red zone, let's get in touch. I'm at [redacted]