What does the debt FEEL like?

March 18, 2026

by a searcher from Harvard University - Harvard Business School in Los Angeles, CA, USA

Anyone who pursues search has to get comfortable with the debt (bank debt, seller note), often times an SBA loan. For those who have closed on deals and are now operating, how does the debt "feel" and compare to your expectations going into your search? I have a mortgage, but I imagine having a large business loan to service feels different.

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Reply by a searcher
from Harvard University in Calgary, AB, Canada

This is a great questions @redacted‌! The difference between business debt and mortgage debt is that you could 'brute force' a mortgage. Eat ramen, cut all expenses, get 3 jobs, and you could find a way to make payments. The same isn't true on a business loan that takes $100k / month. At most leverage levels, you're nervous about making payments every single month, especially if you undercapitalized the acquisition. On the bright side, this forces you to be very disciplined with cash. On the downside, cash management is mentally draining and distracts you from pursuing the growth opportunities that attracted you to the business in the first place. There are no silver bullets. Overcapitalizing is expensive since it's at equity rates, missing growth opportunities or defaulting on loans is also expensive. If it was easy, everyone would do it.

Reply by a searcher
from Massachusetts Institute of Technology in Naples, FL, USA

Now that I'm on the other side and operating, I do not spend much time worrying about debt payments because I modeled many scenarios during due diligence, and I made sure that I only purchased businesses that could easily cover senior debt, even if high one-time expenses or an economic downturn occurred. One of my car washes was a little too thin for my liking in the event of a competitor moving in down the street. In that situation, I chose to purchae it outright. If I couldn't do that, I would have walked away from the deal. The stress and worry isn't worth it, IMO. TL;DR: You don't really feel it if you did proper DD to ensure that you're going to have enough proceeds from the business to service the debt regardless of what kind of debt you have. That said, you always know it's there and the impact it has ultimately depends on the terms you enter into.

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