If you're looking to expand your concrete company by acquiring a competitor's business, financing the acquisition can be a major challenge. Fortunately, the Small Business Administration's (SBA) 7a loan program can be a great solution to help you achieve your goals.
In this post, we'll provide an overview of how the SBA 7a loan program works, and how it can be used to finance a concrete company acquisition.
Understanding the SBA 7a Loan Program
The SBA 7a loan program is designed to provide small businesses with the funding they need to start or grow their operations. The program offers loans of up to $5 million, which can be used for a variety of purposes, including:
- Working capital
- Equipment purchases
- Real estate acquisitions
- Business acquisitions
One of the most attractive features of the SBA 7a loan program is its high loan-to-value (LTV) ratio. In some cases, you can get up to 100% financing for business expansions.
Financing a Concrete Company Acquisition with SBA 7a
If you're looking to acquire a competitor's concrete company, the SBA 7a loan program can be a great solution. Here's how it works:
- Assume the cash flows of the business are decent: You can get at least 90% loan-to-cost on the acquisition of the business. The seller could potentially carry back 5% on standby, and you could come in with 5% or some of our investor lender SBA Partners will allow on a business expansion.
- Real estate is not involved: If there's no real estate involved, 90 to 100% financing is achievable for a business expansion. A 7a loan would be the highest leverage available.
- The acquisition cost is $2.2 million: If the cost of the business is $2.2 million or less, and you don't have any other SBA allocations for your existing business, a 7a loan is the way to go.
- Up to 100% financing for expansion: If you're using the loan for expansion, you can get up to 100% financing. This is significantly more than what conventional financing would offer.
In summary, the SBA 7a loan program can be a great financing solution for acquiring a competitor's concrete company. With high LTV ratios and attractive interest rates, it's worth exploring if you're looking to expand your business.
Conclusion
If you're a real estate investor looking to grow your existing real estate business, it's worth considering the SBA 7a loan program. By using this program, you can get the financing you need to acquire a competitor's business and expand your operations.
If you're interested in learning more about the SBA 7a loan program or getting a free strategy call to help you with your real estate investing goals.