Why Work with a Loan Broker for an SBA Acquisition Loan
Reasons to Use an SBA Loan Broker for Your Business Acquisition
Buying a business is hard. After all, if it was easy to do, more people would do it.
As a searcher buying a business, or an existing business owner that is working on expanding your business through an acquisition, one of the most important and valuable things that you need to safe guard at all cost is your time.
There is a famous quote by Jim Rohn: “Time is more valuable than money. You can get more money, but you cannot get more time.”
Navigating through the financing process can be both difficult and time consuming. Banks are in the business of making loans. It is very rare when you reach out to a bank as a searcher that the banker that you speak with will tell you that they can’t do your deal.
More often than not, you will be asked to produce a full package of documents – business tax returns for the target company being purchased, your personal tax returns, your personal financial statement, and other materials, for the banker to provide a comprehensive look at the file and give you feedback.
By the time that the package has been sent to the lender in its entirety, time has been invested. Time on your end and time on the lenders end. At this juncture, you do not know if there is strong interest from the lender, or if you are simply wasting time going down a path with them that will lead to nowhere.
Is There A Better Way to Navigate the SBA Financing Process? Yes.
SBA loan brokers like myself have access to a wide network of lenders. Each of these lenders has their own specific “credit box.” These are types of industries and other parameters that are important to a specific bank. When a deal does not fall inside of these parameters, it ends up being an uphill battle to get it approved, leading to frustration for both the searcher and the lender.
Unfortunately, what happens when you are not using an SBA loan broker that has a thorough understanding of the credit boxes for each bank is that you will end up in a situation where a lender may be taking on your loan request to meet their annual loan sales quota, knowing that there is only a slim chance of your loan being approved. In this circumstance, typically what happens is that the loan is either declined by the bank, or it ends up being an uphill battle in the bank’s credit committee to obtain the approval, and from there the closing process becomes frustrating for the buyer since it is a rush to meet the closing timeframe due to underwriting taking longer than anticipated.
Working with an SBA loan broker such as myself allows you to avoid these headaches for several reasons. First, I get paid when the loan closes. My incentive is for your loan to get closed and funded. Period. Taking a chance working with a lender where the bank is taking a half court shot to get your loan funded is a situation that I won’t entertain since my livelihood is dependent on your loan closing. Second, I have worked in the SBA space during the last seven years at some of the nation’s top SBA lender banks. Each of these banks has its own unique credit box, and while working at each of them, I have learned the types of deals that each bank does and does not finance. Also, when coworkers have left my prior employers to work at different banks, I have stayed in touch with them to learn the credit boxes of their new banks. By having this depth of exposure in the industry and wealth of connections, I can save you as the searcher a tremendous amount of time in the process of finding a lender. Lastly, there is significant value that I can add for you over and above finding the financing for your acquisition. Each specific type of transaction has its own unique requirements. For example, if you are buying a business that operates out of a leased space, you will need to either work with the landlord on entering into an assumption of lease or negotiating a new lease. There will also be a document that you will likely be required to obtain for your lender called a landlord agreement, that provides the lender with permission to access business assets financed at the location that you are purchasing in the event that your loan goes into default.
As someone that knows the documents relevant to each type of M&A transaction, similar to those described above for a business operating out of a leased premises, I can help you with knowing which items to focus on during the underwriting process to avoid last minute delays and fire drills that can come up when some of these items are started post-approval, and you have limited time before closing. If you are a searcher or business owner looking to buy a business or grow through expansion, I would definitely love to speak with you to see if I would be a good fit to help with sourcing financing for your business acquisition. Please feel welcome to reach out to me via email at matthias@pioneercap.com. or feel welcome to drop a time to connect on my calendar using the following link: https://calendly.com/pioneercapitaladvisory/in-depth-one-on-one-consultation
Best wishes with the success of your search, and I look forward to connecting!
Regards,
Matthias Smith
Founder / Owner
Pioneer Capital Advisory LLC
Email: matthias@pioneercap.com.