Business Ownership Coach | Investor Financing Podcast — If you believe SBA loans stop at $5 million, you are only seeing half the picture. In this post I break down how elite dealmakers use an SBA pari passu structure to stack SBA and conventional capital, fund $5 million to $10 million plus acquisitions, and preserve more ownership without adding unnecessary equity partners. As a Business Ownership Coach | Investor Financing Podcast host, I walk through the terminology, a real $10 million example, the benefits, the common pitfalls, and how to find the right lenders or brokers to get these deals done.

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What pari passu means and why it breaks the $5 million myth

Pari passu is Latin for equal footing, but in the lending world pari passu structures often translate to a coordinated senior position between an SBA-backed loan and a conventional loan. In practice the borrower has an SBA 7a portion and a conventional portion, both treated as senior debt, which can be funded by the same bank or coordinated among lenders. This technique is how high-level borrowers and brokers defeat the common belief that SBA limits make larger acquisitions impossible. As a Business Ownership Coach | Investor Financing Podcast, I emphasize that the key is combining capital sources in a way that respects SBA regulations while unlocking added proceeds.

Why lenders use pari passu for larger deals

Lenders use pari passu when there is strong cash flow but traditional SBA options like the 504 are unavailable because there is no real estate to collateralize. The typical gap appears in the $6 million to $12 million range where single-source financing is scarce. When a business shows significant EBITDA and top-line revenue, a bank that understands pari passu can underwrite a combined stack that includes up to the SBA 7a maximum on one side and conventional proceeds on the other. This approach expands capacity without pushing collateral beyond what the borrower actually has to offer. In my experience as a Business Ownership Coach | Investor Financing Podcast host, it is this cash-flow-first underwriting that makes pari passu practical for larger acquisitions.

Real-world $10M example: capital stack breakdown

Here is a distilled version of a real transaction I worked on. The borrower was buying a $10 million business with almost no collateral — a typical “airball” acquisition with only modest inventory and equipment. Big SBA banks could not produce the needed proceeds when the borrower went direct. Working through our network, we structured the financing as follows:

• SBA 7a loan up to $5,000,000
• Conventional loan for $2,200,000
• Seller financed $2,000,000
• Close to $800,000 in working capital built into the stack
• Borrower equity requirement: 10% of the total project cost (for this $10M deal that meant $1,000,000), achieved through a $300,000 contribution from the buyer and $700,000 from a partner owning less than 19%

Because both the SBA and the conventional loans were in first position and underwritten by the same bank, we avoided the common issue of conflicting priorities among lenders. The borrower remained the sole guarantor, retained meaningful control, and walked away with nearly $800,000 in working capital at closing. As a Business Ownership Coach | Investor Financing Podcast, this type of structure is exactly what I teach when clients want to scale without surrendering ownership unnecessarily.

Borrower benefits and common pitfalls

The primary benefits of pari passu structures are clear:

• Ability to close larger transactions that would otherwise leave a funding gap
• Reduced need to bring in additional equity partners and dilute ownership
• Potential to secure working capital as part of the financing

But watch out for these pitfalls:

• Not all lenders will underwrite non-real-estate acquisitions in the pari passu model; the pool is limited
• When collateral is thin, the number of willing lenders narrows to two or three for larger deals
• Mis-handled submissions can waste months and frustrate sellers, making deals fall apart

As a Business Ownership Coach | Investor Financing Podcast, my recommendation is to prioritize good debt over more investors when your goal is ownership retention. If you must raise capital, structure it so equity stays under critical thresholds and get debt that supports your control and growth objectives.

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Finding lenders who will fund pari passu deals

Only a handful of banks and non-bank SBA lenders consistently underwrite pari passu deals, and even fewer will do non-collateral acquisitions at scale. In practice we work with about five or six lenders who can execute pari passu structures when there is real estate in the picture. When there is no real estate, that shortlist usually shrinks to two or three. There is movement within the industry toward higher SBA limits in some sectors, like manufacturing, which will broaden options over time.

So how do you find these lenders? Two approaches work best:

1. Work with a specialized SBA broker who has established relationships and can run multiple banks in parallel
2. Identify community and SBA-savvy banks with experience in business acquisitions and present strong cash flow metrics

I typically advise borrowers to engage a competent broker. Brokers can have multiple conversations without formally submitting a file, saving you months of wasted time. They also deliver competitive term sheets faster because they already know which lenders will be receptive. As a Business Ownership Coach | Investor Financing Podcast, I find that a tight broker-bank relationship is the most efficient path to closing these deals.

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How to prepare your deal for pari passu financing

Preparation is everything. If you want to present a pari passu deal that gets traction, do this first:

• Assemble clean, recent financials and a detailed income statement and cash flow projections
• Clarify the capital stack and where seller financing, working capital, and equity contributions sit
• Decide whether you will bring in a minority partner to meet equity requirements and how that affects ownership
• Engage a broker early to field-test the deal with multiple banks before the seller loses patience

A well-prepared package reduces friction and increases the chance that a lender will issue a term sheet quickly. As a Business Ownership Coach | Investor Financing Podcast, I emphasize that speed matters when sellers expect certainty.

Next steps: working with a broker and getting funded fast

If you are structuring a deal over $5 million, the fastest path to confirmation is to work with a broker who understands pari passu and has a proven lender network. Expect to run two or three banks in parallel, keep the seller informed, and avoid unnecessary delays. Remember, successful pari passu financing is about matching strong cash flow stories to the precise banks that will underwrite them.

As a final reminder from the Business Ownership Coach | Investor Financing Podcast perspective, the goal is to keep ownership as high as possible while getting great debt. Pari passu deals do exactly that when executed correctly.

Conclusion: unlock bigger deals without losing control

Pari passu financing is not a trick; it is a practical structure for borrowers who need more capital but do not want to dilute equity or stretch collateral. Whether you are buying a multi-million-dollar business with minimal collateral or stacking capital for commercial real estate, understanding how SBA and conventional loans can live side-by-side gives you options. If you want to move quickly, involve a broker who knows the lender landscape and can assemble the right package. As a Business Ownership Coach | Investor Financing Podcast, my advice is simple: get good debt, keep ownership, and act with preparation and speed.