The Road to Growth Through Acquisition
With more than 1.5 million new businesses created in Florida since January 2020, how will you grow? As a business owner your needs are constantly changing based on the financial markets, the environment or even factors within your company. Southwest Florida has a steady and resilient economy and new businesses are coming at a rapid pace. Governor DeSantis announced that Florida leads the nation in new business formations, since January 2020.* This constant change can alter the landscape of your business as well as influence the needs you have while you are trying to grow your business and reach financial goals.
From rebuilding to restructuring to potentially buying out a partner or a business, your lending options need to align with your business goals. One of the options to help you is the SBA 7a Loan.
Understanding the SBA 7a Loan
The SBA 7a loan allows for needed capital with longer terms that could potentially free up cash flow and allow you to fulfill the business needs you have right now. This loan can be used for a few different reasons. One of which is business acquisitions. Whether you are buying a business or buying out a partner or group of partners who are ready to move on, the SBA 7a loan could help.
Lender Requirements
What do lenders want to see from the seller’s business in this type of transition? Lenders will consider a set of criteria to know if a business is eligible for SBA 7a financing.
Steady Increase in Revenue.
Lenders like to see that there is a positive increase in revenue and if there is not, they want to be sure you can identify why and alter your business plan for growth.
Lenders like to see that there is a positive increase in revenue and if there is not, they want to be sure you can identify why and alter your business plan for growth.
Reputation of Your Business.
How are you seen within the community or within the company? Clients and colleagues can speak volumes. Make sure you are leading well and that your key colleagues are part of the business and not just working for it.
How are you seen within the community or within the company? Clients and colleagues can speak volumes. Make sure you are leading well and that your key colleagues are part of the business and not just working for it.
Transition Training.
Lenders want to see that a transition plan is in place and that necessary training is being done. Make sure a solid plan is defined in the purchase agreement.
Lenders want to see that a transition plan is in place and that necessary training is being done. Make sure a solid plan is defined in the purchase agreement.
Skin in the Game.
Seller financing shows the lender that a seller is confident in the new owner’s abilities to run and grow the business.
Cash Flow.
Are the operational needs for the company able to be met? It is important that working capital is available.
Are the operational needs for the company able to be met? It is important that working capital is available.
There is a lot to consider when preparing to buy a business or buyout a partner. As a trusted advisor who can help you understand what is involved and provide the tools to help you achieve your dreams and goals, Gulf Coast Business Bank supports the Southwest Florida community and local businesses. Visit gcbbswfl.com for more information or call 239-345-BANK (2265) to speak with a representative today.
Bill Blevins is President and CEO of Gulf Coast Business Bank (GCBB). Locally owned and operated by some of Southwest Florida’s most experienced bankers, GCBB is personally invested in the success of the community and its businesses. Through highly competitive and tailored products and services, state-of-the-art technology, and personalized banking decisions made locally, GCBB goes above and beyond to build a strong and consistently growing local economy.
*flgov.com