Small Business Financing - Real Stories, Real Success

Key Employee's $3.4 Million Manufacturing Acquisition with Zero Down Payment 

Situation:

A long-standing and valued key employee sought to acquire the manufacturing company where he had dedicated his career. The total acquisition cost was $3.4 million, presenting a significant opportunity for the employee to transition into ownership and continue the company's legacy.

Financing Strategy:

• Zero Down Payment: The acquisition was structured with no initial down payment from the buyer, addressing the employee's limited upfront capital.
• 10% Seller Note: To meet the requirements of an SBA loan, a 10% seller note was implemented. This note, amounting to $340,000, demonstrated the seller's confidence in the employee's ability to successfully lead the company.
• SBA Financing: The remainder of the purchase price, $3,060,000, was financed through an SBA loan. This allowed for the 0% down payment, and helped to mitigate the perceived risk for the lender.

Strategic Implications:

• This acquisition highlights the potential for key employees to transition into ownership through creative financing strategies.
• The use of a seller note, combined with SBA financing, facilitated a transaction that would have otherwise been impossible.
• The seller note also shows the seller is invested in the success of the buyer.

Key Takeaways:

• Most lenders would not do this deal.  They want "skin" in the game.
• Internal transitions can be highly successful, leveraging the knowledge and experience of key employees.

The $1.6 Million Insurance Book Purchase 

Situation:

A rising insurance agent identified a compelling opportunity: acquiring the established book of business from a retiring veteran. This $1.6 million acquisition represented a strategic move to accelerate growth, instantly expanding the new agent's client base and revenue stream.

Challenge:

• Buyer's limited cash: The new agent demonstrated their commitment with an $80,000 down payment (gift from family member), representing 5% of the total acquisition cost.
• Seller's Investment: The retiring agent, expressing confidence in the buyer's potential and the value of the business, provided an $80,000 seller note, effectively financing an additional 5%.
• The Collateral Challenge: There was very limited collateral available.  We were still able to fund the transaction.

Healthcare Practice Acquires $1.8 Million Commercial Real Estate with 100% Financing

Situation:

A successful healthcare practice was leasing its office space. The landlord decided to sell the $1.8 million commercial property, presenting the practice with an opportunity to own their location. However, the practice had limited liquid cash reserves, making a traditional down payment challenging.

Challenge:

The primary challenge was to secure 100% financing for the $1.8 million purchase, given the practice's limited cash on hand. The goal was to avoid disrupting the practice's cash flow while capitalizing on the opportunity to own their real estate.

Solution:

We provided 100% financing for the $1.8 million commercial real estate purchase. Another SBA loan success achieved through small business financing!