Bruce Marks has made a career out of mastering lower middle market business acquisition financing by leveraging the SBA 7(a) loan program coupled with a Pari Passu conventional loan for loan requests that exceed the SBA's $5 Million borrowing limit. In this Episode Bruce pulls back the curtain revealing how to structure a Pari Passu loan for success by diving deep into risk assessment, the searcher, the target business along with working capital, quality of earnings report, debt service coverage ratio and a whole lot more. If you liked this content, let's connect on social media: Instagram: https://instagram.com/mysbapro Twitter: https://twitter.com/mysbapro LinkedIn: https://linkedin.com/in/ryanpatryck
Link to full episode: https://youtu.be/Q_7uIW6auD4 ⁠More ThinkSBA Resources

⁠⁠⁠⁠https://calendly.com/thinksba⁠⁠⁠⁠ - Schedule Call ⁠⁠⁠⁠https://g.page/thinksba⁠⁠⁠⁠ - Google Business Page & Reviews ⁠⁠⁠⁠https://thinksba.com/faq⁠⁠⁠⁠ - Frequently Asked Questions ⁠⁠⁠⁠https://mysbaloanpro.com⁠⁠⁠⁠⁠ - My SBA Loan Pro Podcast ⁠⁠⁠⁠https://youtube.com/@thinksba⁠⁠⁠⁠ - YouTube Channel

Working capital has many meanings and definitions depending on the application of funds. For the purpose of this podcast, I will define working capital as capital provided to a business to fund tangible recurring business expenses or capital expenditures.

Working Capital For Growth

As an SBA Loan Broker, I often receive inquiries from SMB owners for working capital to fund the growth of their business. Their definition of working capital is the transfer of funds from the lender's bank account to their bank account without any strings attached. This is not the definition of working capital.

Let's set the record straight.

Banks provide working capital to fund specific uses such as the purchase of equipment, furniture, fixtures, tenant improvements and fixed expenses such as rent, utilities, maintenance, and employee wages.

Therefore, it is important to understand that in preparing your application to submit to SBA lenders, you will need an itemized list of what we call "Use of Proceeds." Just as it implies, the phrase "use of proceeds" simply means identifying the tangible items the funds will be used for by the borrower.

To be crystal clear. When a borrower is requesting working capital for growth, they should not expect the funds to be sent to them without providing a detailed use of proceeds.

Working Capital To Acquire a Business

When applying for an SBA loan to acquire a business, lenders will nearly always provide working capital to sustain the borrower through the transition of the business. This typically includes working capital to pay up to 90 days of fixed expenses and what I refer to as "free working capital," which means the ability to spend the capital without strings attached. This amount of free working capital is normally small compared to the larger amount used for tangible capital expenditures or recurring fixed expenses.

You Are Ready To Apply

Now that you know how to properly prepare your application, you can successfully apply for working capital to grow your existing business or successfully transition a newly acquired business.

If you liked this content, let's connect on social media:

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More ThinkSBA Resources

⁠⁠⁠⁠https://calendly.com/thinksba⁠⁠⁠⁠ - Schedule Call ⁠⁠⁠⁠https://g.page/thinksba⁠⁠⁠⁠ - Google Business Page & Reviews ⁠⁠⁠⁠https://thinksba.com/faq⁠⁠⁠⁠ - Frequently Asked Questions ⁠⁠⁠⁠https://mysbaloanpro.com⁠⁠⁠⁠⁠ - My SBA Loan Pro Podcast ⁠⁠⁠⁠https://youtube.com/@thinksba⁠⁠⁠⁠ - YouTube Channel

Join Ryan Smith, Principal and Founder of ThinkSBA, as he sits down with John Homan, esteemed SBA Loan Workout Specialist. John shares valuable insights into the intricacies of SBA loan defaults, including how to avoid defaulting, how lenders respond to non-payment to mitigation strategies. Discover how to safeguard your assets, negotiate settlements, and overcome challenges, all while maintaining a positive outlook. Don't miss this empowering discussion tailored for SBA loan guarantors facing defaulting on their loan payments.

If you liked this content, let's connect on social media:

Instagram: ⁠⁠https://instagram.com/mysbapro⁠⁠ Twitter: ⁠⁠https://x.com/mysbapro⁠⁠ LinkedIn ⁠⁠https://linkedin.com/in/ryanpatryck

Chapters: 00:00 Introduction 00:29 - John's Bio 2:25 - Types of Loans 5:06 - Common Issues with SBA Loans 8:54 - Personal Guarantees and Collateral 10:53 - Asset Protection Strategies 12:29 - Handling Default and Settlements 16:22 - Repossession and Foreclosure 24:33 - Finding Help for SBA Loan Default 27:00 - Lender Aggressiveness 28:02 - Success Stories 31:21 - Due Diligence for SBA Loans 34:07 - Assessing Business Opportunities 37:02 - Contact John

Link to full episode: https://youtu.be/w0S0tgSccTQ?si=BiYYCUf-5GwnUPEw ⁠More ThinkSBA Resources

⁠⁠⁠https://calendly.com/thinksba⁠⁠⁠ - Schedule Call ⁠⁠⁠https://g.page/thinksba⁠⁠⁠ - Google Business Page & Reviews ⁠⁠⁠https://thinksba.com/faq⁠⁠⁠ - Frequently Asked Questions ⁠⁠⁠https://mysbaloanpro.com⁠⁠⁠⁠ - My SBA Loan Pro Podcast ⁠⁠⁠https://youtube.com/@thinksba⁠⁠⁠ - YouTube Channel