Hi,
I’ve been approved for an SBA loan with a personal guarantee (PG) to finance a $6M acquisition at just under a 4x EBITDA multiple. However, I’m looking to explore options for removing the PG in year two, even if it means refinancing at a higher interest rate or pursuing alternative structures.
What are the best options for refinancing out of the SBA loan while eliminating the PG? I’d love to hear from anyone with insights—especially those who have successfully navigated this process. Thanks!
SBA- PG Bank - usually PG in all forms for business acquisitions (regular bank loans or USDA loans). Could change a little if you have significant asset collateral Bank Sponsor Team - usually non-PG but need a deal with $4M+ of EBITDA. Differs by bank so you might be able to find something with differnt thresholds SBIC - usually non-PG but need a investment track record and a deal with $1M bare minimum EBITDA and 95% of SBICs have a $3M min ebitda threshold.
As you can tell the only real way to refi out of your loan will be to grow your business dramatically so you can tap into different pools of capital. Just keep in mind too that it's harder to refi than it is to get an initial deal done because lenders really want you to be putting in your cash at the same time they are putting their's in.