SBA financing for SaaS company that is a corporate divestiture

March 03, 2023

by a searcher from Babson College - F.W. Olin Graduate School in Northborough, MA 01532, USA

We are evaluating a SaaS acquisition opportunity that is a corporate divestiture. In order to assess SBA financing options I'm told:

- Parent company would need to extract revenue and expenses for this business (that were reported in their corporate tax returns)
- For the prior 3 years (at least)
- Figures need to be provided on a monthly basis
- Parent company accountant needs to attest to the accuracy of these figures

Two questions:
(1) Can anyone please comment on whether this is correct - anything missing?
(2) Does anyone have a specific example of this type of extract that they would be comfortable sharing?

We're keen to minimize the back and forth with the company accountants, so want to give them very specific instructions and ideally a template/example.

Thanks in advance!

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Reply by a lender
from Trinity College Connecticut in Boston, MA, USA

If the current owner is a large enough company, I'd hope that they maintained a separate P&L for this business as part of their internal financial statements, which today would be needed for the full years 2020, 2021, and 2022, as well as the Interim 2023 period (which SBA lenders will require). If so, having that historical information would make the process of presenting adequate information to a lender about this business on a stand alone basis much easier. If they did not keep separate P&L's for this business, then you are looking at doing a "Carve-out" of the results, which could be a time consuming and expensive process. Having the separate P&L's to subtract from the Consolidated Financials, which can be tied to the Tax Returns will go a long way toward satisfying a lender. Prior to being an SBA lender I was a CPA and CFO and have seen many carve-out transactions be done for the sale of business. If you'd like to discuss further, contact me at###-###-#### or at redacted

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I can attest from years of commercial lending these are very challenging deals to get done. I would recommend as already stated: 1) Accountant prepared profit and loss statement and balance sheet for the division; and 2) QofE to verify the accuracy of this information. This is likely the only way to have a shot at getting an SBA lender comfortable. Please let us know if you need any help with the financing. If you have some initial numbers it might be worth running a financing analysis up front to be sure it is even doable and you will qualify if the numbers come back as provided. I can be reached at redacted or here if you need assistance with this.

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