Recently Funded - $4.2MM SBA 7a Franchise Acquisition Loan
A 21 location West Coast franchise business is acquired by longtime manager with an SBA 7a loan.
An experienced manager of a multi-site franchise with 21 locations wanted to purchase the business from the owner, who was anxious to sell. The manager had 10+ years of experience running the business with little involvement from the owner.
The seller was asking $5.2MM for the business.
The buyer had been to some banks who were unwilling to provide the necessary leverage and to another broker (specializing in franchises) who over promised and was ultimately unable to deliver.
She found Speritas Capital Partners online and asked us to help.
Speritas provided the buyer with both conventional/bank and SBA options. The borrower decided the SBA loan structure was the best option.
ABOUT THE LOAN
- Loan Type: SBA 7a Loan for Business Acquisition
- Lender: SBA Preferred Lender
- Loan Amount: $4.2MM | 90% LTV
- Term: 10 years / variable rate
LOAN TYPE: SBA 7a
SBA PREFERRED LENDER
CLOSED IN: 60 DAYS
The Challenge: The buyer had some equity but not enough to reach the 10% minimum requirement set by the SBA.
- Find an investment partner to contribute equity
- Ask the seller to hold a carryback note to make up the difference between the purchase price and what the bank was willing to lend.
Speritas was able to help the buyer structure the investor participation so that the investor did not have to guarantee the loan or provide full disclosures by limiting their investment to less than 20%.
This was a complicated deal to underwrite – with 21 sites – and 21 leases needing to be reviewed and renegotiated, but the lender was still able to close in 60 days.
The ability to expand in the short term was important to the buyer, so the lender that Speritas identified was one that could provide flexibility for franchise expansion and related equipment.
As an integral member of the structuring team, Jeff helped usher the deal from introduction to close.
CONCLUSION – POST FINANCE UPDATE
The buyer was able to acquire 21 successful franchise locations for $5.2 million and gave up less than 20% of her company to complete the acquisition.
With the help of Speritas Capital the new owner ended up with affordable monthly payments and is strategically positioned to improve performance and add locations.
The client writes...
``Thank you Jeff ! You made this happen and I appreciate you finding the right bank. The franchise industry is always in need of new capital sources.``
The Speritas Capital team is always happy to hear your story, learn more about your financing needs and answer your questions. And we never take an up front fee. Contact Speritas Capital Partners today!
Jeff Bardos, CEO
Cathy Blood, Partner and Director of Marketing
The Speritas team brings our 30+ years of banking experience and our transparent, strategic approach to every client and every deal, both large and small.