Quick questions on Financing

searcher profile

January 15, 2025

by a searcher from Brigham Young University in Dallas, TX, USA

I'm new to the community and I have a couple of questions on financing. I'm relatively early in my self-funded search process and was wondering what the best timing is to engage with a banker about financing? Is it helpful at all to engage prior to identifying a target transaction?

Also, in comparing SBA vs. non-SBA lending, what is a typical down payment requirement for Non-SBA loans without a personal quarantee.

Thanks in advance.

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commentor profile
Reply by a lender
from University of Florida in Dallas, TX, USA
Hey Barry! I am an SBA Lender located here in DFW. I prequalify most of the Borrowers I work with for an acquisition target range prior to them submitting an LOI. I also review CIMs with my Borrowers prior to LOI submittal to ensure they are asking the appropriate questions on the front-end. In most cases, a Borrower works the LOI and due diligence on the transaction in tandem with the bank financing piece. Sellers like to hear that they have already had discussions with a lender prior to submitting an LOI to ensure the offer has meaning.

Since I am exclusively an SBA lender, I do not have 100% visibility into non-recourse M&A activity equity injection requirements. I do know that most conventional lenders in DFW require a minimum of 35% down on a transaction with a personal guaranty. Unless a loan is fully collateralized or guaranteed with significant corporate guarantors, PGs are hard to avoid.

I would be happy to hop on a call and answer any further questions you have. My email is redacted and my cell is###-###-#### .
commentor profile
Reply by a searcher
from Hillsdale College in New York, NY, USA
Reach out to ^redacted‌ for support. There is probably no one else who does more SBA deals, and he will be able to help you evaluate what a realistic structure is. if you've never financed a deal before then the fee someone like Matthias charges is a lot cheaper than the mistakes you'll make on your own. We're much larger and have funded 4 deals, but still intend to work with capital raisers or investment banks for all kinds of financing.

One thing I've learned is that every bank is different, and every deal has maybe one lender that will be exactly perfect, and hundreds who will be almost perfect. An experienced guide can help you find the one perfect lender.
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