Ways to structure a deal for license-driven businesses, w/o having a license?

February 19, 2026

by a searcher from Dartmouth College - Tuck School of Business at Dartmouth in New York, NY, USA

Hi - I am 6m into my search, based in NYC and looking for a business in the tri-state area. I've looked at a few trade/services businesses that are license-driven (mostly commercial electrical contractors), and I was wondering if anyone has gotten a deal done without being, or planning to become, a license holder. I know it's gotten significantly harder since SBA rule changes last summer, but I'm trying to find ways around it. So far the best option I've found is to make the current license holder roll some equity and PG (limited exposure) the loan, which is not very attractive for the seller. Note: when I say ways around it, I mean to structure a deal to get SBA approved but also (and most importantly) to ensure business continuity

3 Likes

7 Replies

113 Views

Replies

Reply by a lender
from Cornell University in Los Angeles, CA, USA

Hi ^redacted‌ - nice to meet you. Great question, this is something we deal with regularly at my brokerage. You're right that the SBA rule changes last year made this harder, but deals still get done. On the seller equity/PG route: Yes, you can have the seller retain equity below 20% and provide a personal guarantee, but it has to be for a minimum of two years. In our experience, sellers don't love this option because the PG is unlimited, meaning they're on the hook for the full loan amount even if they only own a small piece of the business. That's a tough sell for someone trying to exit. What we've seen work better: We usually get these deals done by having an existing licensed employee sign a multi-year employment agreement with retention bonuses built in. This solves both problems. SBA gets comfortable because there's a licensed individual committed to the business long-term, and you maintain business continuity without depending on the seller to stick around. We actually just closed on a large commercial electrical contractor using exactly that structure to get around the licensing issue. The key is making the employment agreement and retention package strong enough that the lender and SBA feel confident the licensed person isn't going anywhere. We have a lot experience financing these types of companies via the SBA. If you ever need help reviewing a deal, I am happy to help. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: https://cal.com/francodeguzman/30min. Look forward to chatting!

Reply by a professional
from University of Notre Dame in New York, NY, USA

Hi ^redacted‌ - We do a ton of trade deals (both SBA and non-SBA)... you're correct in that it's become much more difficult to get these deals done if you're using SBA financing. Options are: (1) have seller roll equity and remain as the license qualifier (which requires the partial PG if they roll under 20%); (2) identify an employee who can qualify the license - although your SBA lender sees that as key-person risk and will almost certainly ask you to give them equity; or (3) use one of those "buy a qualifier" services (like https://rmoagency.com/) ... depending on the state, the agency might require you to provide the qualifier with a nominal equity issuance (typically to get around state requirements that would otherwise limit the qualifier from qualifying multiple businesses)... again your SBA lender may view option (3) least favorably and require some safeguards around it (although we've closed a couple trade SBA deals post the seller rollover rule changes using option (3) and it worked out). Happy to chat through options in more detail - redacted

+5 more replies.

Join the discussion