1. Equipment- we have lenders that will extend capital on the forced liquidation value of the equipment that the buyer of the existing business can leverage to get capital for the purchase price. Many of our lenders will do "simultaneous closings" where they will extend the capital to the new buyer which they can use for the purchase price to complete the transactions with the sellers.
General terms are:
Rates are typically 8%+
1-5 year terms
Sales leasebacks and term loans
We have a ton of our equipment lending partners wanting to deploy loans on these deals so if you have one send it over!
2. A/R Financing:
We have lenders that will lend against the Accounts Receivables of the existing business and similar to our equipment lenders do a simultaneous close to extend the capital to the buyer to complete the transaction with the seller. We can do AR deals as low as 50k+ with many of our Fund Managers preferring 1M+ deals
3. Merchant Cash Advance- many brokers and borrowers dont think of using an MCA like a credit line to acquire an existing business. We have MCA partners that will extend MCA's that dont have pre-payment penalties. We use this then to get the existing business leverage quickly to take down the business they are acquiring and then they refinance or pay off the MCA. We normally advise with this strategy having a very clear exit for the MCA product as holding an MCA long term on the books can be expensive.
4. Revenue Based Lines of Credit- we use this product to help the existing buyer access working capital that they can use to then acquire the business they are looking at acquiring. Revenue based lines are based on the annual cash flow of the buyer.
5. Bank Debt/SBA- The SBA and many of our banking partners have great low interest rate debt programs available. We have more banks calling us wanting to finance our deals right now and majority of there rates start at 4%+.
So if you have any merger acquisition activity whether below the 1M mark or above it please feel free to send over the following to get started:
1. Last 2 year tax returns of the buyer and the seller
2. Last 6 months bank statements
3. Credit Score of the borrower
4. PFS of the borrower
5. Current P and L of the borrower