Working Capital is Key when using the SBA

lender profile

September 13, 2024

by a lender from North Carolina State University - Poole College of Management in Raleigh, NC, USA

Did you know you can include working capital when using the SBA to finance business acquisitions?

Wrapping multiple use of proceeds into one loan is one of the many advantages of the SBA 7(a) Program!

By including working capital in your SBA 7(a) loan for business acquisitions, you ensure a smoother transition and sustain operations during the critical early stages. This is invaluable for your business’s success.

Having those additional funds also allows you to capitalize on growth opportunities as they arise.

Better to have and not need, then to need, and not have.

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commentor profile
Reply by a searcher
from Emory University in Atlanta, GA, USA
Completely agree - having sufficient working capital on day 1 is critical. I'd also recommend a little more than historical average in case the seller had a habit of not paying vendors timely (thereby increasing average AP, but creating tension you may not want as the new owner), I looked at previous deals with Live Oak Bank who helped provide line of credit as part of the debt (SBA)
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Reply by a lender
from Pennsylvania State University in Tampa, FL, USA
I always add a Line of Credit in addition to the permanent working capital to balance sheet for future opportunities or expenses - great point!
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