RECENTLY FUNDED | $4.2MM SBA 7a Franchise Acquisition Loan for West Coast Entrepreneur
LOAN CASE STUDY: A 21 location California-based franchise business is acquired by its longtime manager with a $4.2MM SBA 7a loan arranged by Speritas Capital Partners.
THE SITUATION: An experienced manager of a multi-site franchise with 21 locations wanted to purchase the business from the owner, who was anxious to sell and retire.
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.
Financing Obstacles
The buyer had some equity but not enough to reach the 10% minimum SBA 7a equity requirement set by the SBA.
The buyer needed to find an investment partner to contribute equity
Seller cooperation was required: a key to the deal would be getting the seller to hold a carryback note to make up the difference between the purchase price and what the bank was willing to lend.
Learn more about SBA approved sources for the 7a loan equity injection.
Speritas Capital’s Role - Funding Solutions
Speritas provided the buyer with both conventional/bank and SBA options. The borrower decided the SBA loan structure was the best option.
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.
Questions about SBA 7a loans for a franchise acquisition? Call or text 203-247-4358, send an email, or schedule a call now with Speritas Capital CEO, Jeff Bardos.
About this SBA 7a Loan
Loan Type: SBA 7a Loan for Business Acquisition
Lender Type: SBA Preferred Lender
Loan Amount: $4.2MM | 90% LTV
Term: 10 years / variable rate
Closed in: 60 Days
“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.”
Learn more about the strategic use of SBA 7a loans for a franchise acquisition.
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.
Do you need a strategic partner to advise you on your next business acquisition?
Is an SBA 7a loan right for your franchise acquisition? If you want to dig in and learn more about SBA 7a loans, take a moment to read our SBA 7a White Paper for the latest news and Congressional changes.
The Speritas Capital team is always happy to hear your story, learn more about your financing needs and answer your questions. We bring our 30+ years of banking experience and our transparent, strategic approach to every client and every deal, both large and small.
And we never take up front fees.
Jeff Bardos, CEO Speritas Capital Partners
CONTACT INFO
Jeffrey Bardos
CEO Speritas Capital Partners
Call/text Jeff at 203-247-4358
Email Jeff with your ABL financing questions
Schedule a call with Jeff using our online scheduling tool.
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