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Aug 5 • 11 tweets • 11 min read
1/x: Buying a business can feel like a monumental undertaking as a searcher.

#sba #smb #acquisitions #entrepreneurs
2/x: First, you have to identify a target company and work through the broker and seller to vet the due diligence materials to ensure it is worth pursuing.

#sba #smb #acquisitions #entrepreneurs
3/x: Then, you submit an LOI and hope that it gets accepted.

#sba #smb #acquisitions #entrepreneurs
4/x: Finally, you have to cross the financing step, which can be a significant hurdle in and of itself.

#sba #smb #acquisitions #entrepreneurs
5/x: Which bank do you reach out to? The one that your close friend used for their deal? Wait...The debt service coverage on their deal was better. Maybe that bank isn't a good fit.

#sba #smb #acquisitions #entrepreneurs
6/x: Do you reach out to the bank that is marketing on all of the podcasts and is at the top of the SBA rankings? Perhaps, but maybe your deal doesn't fit in their box either.

#sba #smb #acquisitions #entrepreneurs
7/x: As a searcher, time is one of your most valuable resources. Don't waste it. Taking the DIY approach to financing comes with risks.

#sba #smb #acquisitions #entrepreneurs
8/x: There is the time risk of using critical time to send multiple Twitter DMs to lenders, emails, phone calls, and outbound reach outs.

#sba #smb #acquisitions #entrepreneurs
9/x: Then there is the monetary risk of depleting your down payment funds due to the process taking an extended period of time to find the right financing package.

#sba #smb #acquisitions #entrepreneurs
10/x: If you want to re-gain your time and avoid having to focus on the financing process, please feel welcome to reach out to me. The banks that I work with are ones that can get good deals done with the right operator / buyer.

#sba #smb #acquisitions #entrepreneurs
11/x: Don't take the DIY approach. Please feel welcome to reach out if you have a deal under LOI or close to LOI and are looking to find the best financing option for it:

calendly.com/pioneercapital…

#sba #smb #acquisitions #entrepreneurs

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More from @SBA_Matthias

Matthias Smith - Fueling Entrepreneurs Dreams Profile picture
Aug 7
Buying a business is a very difficult undertaking.

There is a reason that few people do it that consider it.

One of the critical items when it comes to the financing process is having a well written business plan. In this thread, I will cover what one looks like.
1/x: As the buyer of a small to medium sized business (SMB), you are the new variable that is getting introduced to the equation when it comes a business acqusition.
2/x: From a lender's perspective, this creates a risk. The seller's business is currently running at status quo. As a buyer, one of 2 outcomes will happen: You improve things, or you end up running the business into the ground.
Read 11 tweets
Matthias Smith - Fueling Entrepreneurs Dreams Profile picture
Aug 7
These are some great threads about how to buy a business with an SBA loan that I've seen on Twitter over the last several months.

#sba #smb #acquisitions #entrepreneurs
1/x: Sieva Kozinsky's thread below 👇

2/x: Chris Munn's thread breaking down the steps:

Read 6 tweets
Matthias Smith - Fueling Entrepreneurs Dreams Profile picture
Aug 7
I always knew I wanted to be an entrepreneur from a young age.
When I was 8 years old, I had the idea of selling bottled water at the Ann Arbor, Michigan summer art fair with a close friend. 1/x
We made hundreds of dollars operating out of a wagon that we pulled around the art fair, but were kicked out after being reported by a vendor, who told on us for operating without a permit. Since I didn't agree with this, we loaded up with more water bottles and kept selling. 2/x
Read 7 tweets
Matthias Smith - Fueling Entrepreneurs Dreams Profile picture
Aug 6
One critical document that is required when you are buying a business that operates out of a leased location is a landlord waiver (also called a landlord agreement). In this thread, I'm going to cover what it is and why it's important.

#sba #smb #acquisitions #entrepreneurs
When a business is financed with an SBA loan, SBA requires that a lender takes a General Business Security Agreement (a "GBSA") on the assets that are being financed with the acquisition. 1/x

#sba #smb #acquisitions #entrepreneurs
The GBSA, which is perfected by the lender with a UCC filing, allows the lender to liquidate the collateral of the borrower in the event that there is a default on the SBA loan. 2/x

#sba #smb #acquisitions #entrepreneurs
Read 11 tweets
Matthias Smith - Fueling Entrepreneurs Dreams Profile picture
Aug 6
It was brought to my attention today that the maximum allowable spread over Prime for SBA loans over $350,000 is 3%. Of course, this is buried deep in a Federal Register post from 6/30/2022 that the average citizen will never read. 1/2

federalregister.gov/documents/2022… Image
I have confirmed with a trusted source on SMB Twitter that does a lot of lending in the 7(a) space that banks are starting to price some loans at Prime + 3%. Prime is currently 5.50%. This means 8.50%. 2/x
As punitive as this is for SBA borrowers, strong deals still have the ability to obtain good pricing. I received a term sheet this week for a business acquisition in the ecommerce space priced at Prime + 1.75%. 3/x
Read 5 tweets
Matthias Smith - Fueling Entrepreneurs Dreams Profile picture
Jul 8
In this thread, I am going to cover how it's possible to purchase a $5 Million business with $260,000 of cash down. I hope that you find this thread useful and educational.

#sba #smb #acquisitions #entrepreneurs
1/x: SBA requires 10% equity for business acquisitions. This 10% is based on the total uses of funds for the acquisition. The total uses of funds includes the business purchase price, working capital, the SBA guaranty fee, and the closing costs.

#sba #smb #acquisitions
2/x: 1/2 of the 10% can come from a seller note that is on full standby for the duration of the SBA loan. This means no payments can be made on this loan until it is paid off.

#sba #smb #acquisitions #entrepreneurs
Read 12 tweets

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