Are you considering making an acquisition on Flippa, but curious how an SBA loan might help you finance that purchase?

Are you wondering if eCommerce or Content websites can even qualify for an SBA loan?

Curious what sort of collateral is involved or credit is required when looking to get a loan in order to finance the next stage of entrepreneurial evolution?

This webinar is for you.

We were joined by the VP of National SBA Lending for Ameris Bank, Jordan Richmond and had the opportunity to chat specifically about SBA loans when it comes to digital entrepreneurship and business acquisitions.

Take 30 minutes to watch this video and if you have any questions after the fact, just reach out to Jordan and he’ll lend you a hand on your way to successfully owning your future.

Jordan can be reached via LinkedIn or via email at [email protected]

Can I Get an SBA Loan to Purchase an Online Business?

Yes.

Ameris Bank is a full service bank, but they focus strongly on specialty lending within the online space for SBA 7(a) lending.

What is the SBA 7a Program and How is it Used?

It was designed specifically to lend money for non-traditional business transactions.

The SBA does not make the loan, it is the bank that makes the loan.

SBA loans can be used for Business Acquisitions, large goodwill transactions, online business including eCommerce, Content, and SaaS, Working Capital, or Inventory expenditures.

Financing terms are typically 10 year, but each deal is negotiated for their own unique scenario.

Typical loans are from $100,000 to $10m and can reach all the way up to a 90% loan, but there would need to be strong security and collateral to reach that level.

What Counts as Collateral When Purchasing a Digital Business?

When we talk about collateral, the SBA has a very well defined chart for what counts.

Personal or commercial real estate, securities, but typically cash is the best way to secure a deal within the digital space.

In real terms – if you have a $1m house, the SBA will margin that at 85% (so $850,000), less any liens (let’s say a $350k mortgage), now you have $500k in collateral. So, if you’re looking for a $1.5m loan, you now have some meaningful collateral.

The key is to know that it’s unlikely that you’ll get a 90% deal at the top loan level. If you have $100k in the bank and want $1m, it is unlikely to happen.

Can You Use A Website that is Currently Generating Revenue as Collateral?

While there is value there, the SBA does not deem this to be collateral. We’re talking about hard assets such as cash or real estate.

That said, if you have a cash flow positive website AND real estate, that will help you along your way to a deal as it helps prove that you’re an industry expert who knows how to get the job done.

How Do I Know If I’m Eligible

As long as you meet the standard of a small business, below $15m in tangible net worth and don’t have income over $5m, and are a US Citizen, you should be eligible.

When Should I Start The Loan Process?

Self screening is important.

It never hurts to reach out to Jordan at Ameris Bank to get an idea about what a loan might look like based on their personal background so that you have a window for what sort of businesses you should be looking at.

There are people who are often in the system for years, prescreened and pre-approved, before they actually pull the trigger on an acquisition.

If you’re pre-screened, you can get a term sheet within 24 hours once you find the business that you’re interested in purchasing.

This can help you beat out a cash buyer because speed is important.

Can I Get an SBA Loan for a Content Site?

Absolutely. They don’t come up as often as eCommerce, but any revenue generating business is eligible for a loan.

The best advice from Jordan is to realize that you might need a bit more collateral or be willing to leave equity on the table as there is a bit more risk involved in these sorts of businesses compared to a well developed SaaS or eCommerce site.

Do You Help Us Determine An Asset’s Value?

Absolutely. Another great reason to work with an experienced lender like Ameris Bank is that they have incredible data that will help you appraise the business cash flow.

Working both on discounted cash flow and marketing analysis models, they are able to get you a real idea about what this business is potentially worth. Typically they are looking at SDE (seller’s discretionary earnings) and multiples.

For your reference, the transcript of the webinar is below

Ben Weiss:

My name is Ben Weiss from Flippa. I’m joined today with Jordan Richmond, VP of national SBA lending at Ameris Bank, one of our preferred lenders over here at Flippa excited to talk about all things SBA lending today with you all.

Ben Weiss:

If you are attending live, you can jump in, I think at the bottom of your window, somewhere down there, there should be a little question and answer button, Q&A button. If you have any questions while Jordan’s speaking, feel free to type them in there. I will roll through and relay those as we can, but I’m excited, it’s going to be a good day. We’re going to learn about how to buy a business with lending, which is just how everyone wants to do it, right Jordan? No one wants to spend their own money, everyone wants to spend your money.

Jordan Richmond:

Yeah, that’s a problem we can get into, but sure.

Ben Weiss:

Not how you should do it, but how you could do it.

Jordan Richmond:

Right, but I appreciate the introduction and as you said, this is one of the more common messages, to even just have in your industry and your space, is that people think about business acquisitions and buying a business, and yes, it’s eligible with SBA, it’s something you can do, and I feel like that in and of itself is a launchpad to talk about how these transactions work. Yeah, we are a resource for Flippa.

Ben Weiss:

Yeah, absolutely, well, I guess without further ado, let’s jump into it. Just so you guys know, Jordan and Ameris Bank, they’ve been working with Flippa and all sorts of e-commerce and content and just digital investors, SAAS, whatever you’ve got, investors for quite a long time now. They know a lot, these aren’t just traditional bankers who are going to be scared of you if you don’t have an actual brick and mortar concept, so they’re really excited to work with you and spread some information on how you can go about obtaining an SBA loan to acquire something on Flippa. Jordan, I’ll lend it to you for now, if you want to jump into this presentation, we’ll do some Q&A right afterwards.

Jordan Richmond:

Yeah, we’ll do just a quick little screen share of my PowerPoint and while I set that up, exactly to the point you were just saying, this is what I do. The SBA program has been around for umpteen years and buying businesses with it is a common thing, but you’re exactly right, this is not the kind of thing where you’re going to walk into your retail main street branch and ask to buy a business, especially if it’s e-commerce or digital and expect to get an approval right then and there.

Ben Weiss:

Right.

Jordan Richmond:

But yeah, the SBA 7(a) program has been doing this forever and this is for any given quarter, more than half of my businesses is business acquisitions and M&A, and we definitely focus in the digital and e-commerce space. That said, Ameris, we’re a full service bank, they’re headquartered in the Southeast, in Jacksonville, and Atlanta, and there is retail network, but this is specialty lending, this is what we do.

Jordan Richmond:

I’ll just kind of leap into the very high level overview, talk about how we can use this product in the SAAS and digital and e-commerce space, and then just go over some very brief scenarios, like you said, open up for questions and hopefully just give everyone a quick overview.

Ben Weiss:

Yeah, absolutely, I’m looking forward to it.

Jordan Richmond:

Right, so a little bit about Ameris, I’ll just go right into what the SBA program really is. The SBA 7(a) program was designed to make loans that would not be normally made by a bank conventionally without an SBA guarantee. The SBA does not lend the money, the bank lends the money, I lend the money. However, the SBA will then guarantee that loan, and typically they’ll guarantee 75%, this year they will guarantee 90% and that’s how we get comfortable with it.

Jordan Richmond:

Typically, the SBA makes the loan, or when I use the 7(a) products, it’s one of two reasons. It’s because there’s lack of collateral, if you have a $500,000 loan requests and $100,000 house, you’re obviously unsecured. That’s typically when any lender or bank will use the SBA program, when there’s lack of collateral, or when there’s a lack of historical cash flow. You own a bank for a business, you want to typically see two years’ financials, three years financials. Most banks will define immediately a change of ownership as a startup, so if you buy a business, you’re buying cashflow, you’re essentially starting this new business, another reason you’d be an SBA program and that’s why we’re here.

Jordan Richmond:

That said, typically what I lend on is for business acquisitions, I specialize in large goodwill deals. I think we excel in businesses that are about 500,000 to the very high end, three and a half million I’d say it was on the high end, the program will go up to five or six million, but again, in your world Ben, lack of collateral is something that always happens and we need to mitigate that. We like to keep that unsecured component a little bit low.

Ben Weiss:

Yeah, absolutely.

Jordan Richmond:

That said, a common question about how these are used, and what the funds are for is we’ll do SEO, we’ll do e-commerce, we’ll do SAAS, and the common question, especially you look at e-commerce, or either, and they say, “Can I have money for inventory, money for working capital?” The answer is, “Yeah, we will pay for that.” The financing terms are typically 10 year financing, below if you see in the flexible terms, that is very loose terms, we can talk about what a deal structure really looks like and that kind of thing but that is the loose financing scenarios, 100K to 10 million. For digital, I think the space really excels again, 500K to about three and a half million and the 90% financing is another common question as well.

Jordan Richmond:

People say, “How much do I need to put into this deal?” The short answer is 90%, but the long answer is everything would have to be perfect to do a 90% deal where you’re pledging a ton of meaningful real estate collateral, you have experience, it’s typically not your first transaction, but 90% certainly on the table and one and a half million is a general rule of thumb too. We’ll go up to, last year I did, I think maybe right around two million was my largest unsecured deal. The package itself, the financing package, working capital and everything was close to four million, but it was unsecured of $2 million and we had no problem doing that. I can really unpack that and talk about that a little bit more and give some kind of ideas about how you would structure a deal. Just quick, any questions around that though? I just want to make sure, checking in if that’s good with you.

Ben Weiss:

It looks all right, I’m curious, I’m sure some of the new people on Flippa are into this space, when you talk about collateral, what counts as collateral in the digital world? Is it just money in the bank since you don’t have a building to grab if things go wrong, how does that work?

Jordan Richmond:

Yeah, it’s almost like we’ve done this before. This is exactly where I was going. When we talk about the collateral, you’re exactly right, the SBA has a very well-defined chart of collateral. Many people are used to, for instance, receivables you can lend on, or possibly inventory and the SBA really doesn’t like either of those. Certainly they discount all receivables and lend marginally on inventory, but you are exactly right, when you’re talking collateral, it’s specifically personal or commercial real estate.

Jordan Richmond:

It could be marketable securities, so you could potentially pledge something, security wise, stay in the market, that kind of thing, or really cash is typically how someone’s going to secure a digital deal. The SBA allows for FF&E and machinery and equipment, and there is a whole chart in how you margin that, but not on digital. To put that in real terms, you have $1,000,000 house, the SBA immediately will margin that at 85%, so your $1,000,000 home value is now considered 850,000 in the eyes of the SBA. They’ll subtract out whatever lien amounts are, so say you have a $350,000 mortgage, now you’re left with half a million of collateral by SBA standards.

Jordan Richmond:

You’re looking for a million and a half loan, you have half a million of collateral, for me, all things being equal now we’re starting to get somewhere from a commitment standpoint, you’re pledging a meaningful equity, you’re pledging a meaningful collateral, that’s how you get a deal like that done.

Ben Weiss:

Right, it makes sense.

Jordan Richmond:

To really dovetail into just a few things, because one of the most often conversations I have, I do presentations and I have speaking engagements often, people’s takeaway and I don’t want this to be the takeaway, is that you can go into a deal, they’ll go online, they’ll see the max loan amount is five million, they’ll see the max finance is 90% and that’s what they want. When you look at the leverage ratio, it’s really not a 10 to one leverage ratio. If you want $1,000,000 deal, you’re not going to get approved if you have $100,000 in the bank. With one leverage ratio of four to one, really a two to one was the last file I put in, it was a million dollar deal, the guy had, I think 500K post transaction liquidity after he was putting money in, you need to be well-capitalized. I just don’t want people to see that 10% and then glom onto that and say, “I’ve got 100K in the bank, that’s fine.”

Ben Weiss:

I’m going to do a $1,000,000 deal.

Jordan Richmond:

Triple to quadruple that, to make a bank think that that’s palatable. Then the other thing, to exactly what you asked about collateral and getting back to my point about that 10%, is a good message to buyers is, financing matters. Many times you’ll be up against a cash deal, many times you’ll be up against a guy who’s pledging real estate and putting 30% in and that’s competitive. As a seller, I would rather close a deal with a buyer like that who’s pledging meaningful equity and collateral rather than someone coming in with 10% with none of them.

Jordan Richmond:

My takeaway there would be, “Look at going into the deal with more, to get it done from the seller side and also to get approved from the bank.”

Ben Weiss:

Let me just jump in, I’ve got a couple of questions starting to come in. Well, I guess just to clarify, because we’ve got somebody asking, he’s basically saying, so I think you must’ve mentioned it, he was saying, “To get a million, you need 500,000 in the bank.” That’s that’s not true, it’s just the more collateral helps, but I think every deal is individual.

Jordan Richmond:

Yeah, so we’ll look at it like this. It’s a function of runway, it’s a function of your monthly payments and is a really good question because people hear this and they say, “Well, what is the dollar amount?” Like you just said, it’s ethereal, but let’s take a $1,000,000 transaction. The way I say it too is if you go into a deal with 10%, there’s no recourse, there’s no room to repair, you have a swing of inventory, the business valuation comes in light, it takes forever, the seller wants to re-trade, God knows what could happen. If you’re only planning on 10%, the deal is falling apart. I say go into a 15% so you have some framework to save it.

Jordan Richmond:

But to answer that listener’s point directly, if you were to go for $1,000,000 project, say you have, just call it 150K you put into it, then the bank looks at what your monthly payment is, they look at what your personal obligations are and they look at everything, your kids, your spouse, your living obligations, where you are and they give you that monthly runway. A safe amount of runway is probably six months, a good deal has a year of runway in the bank. It’s not only the equity put into the deal, it’s the post-transaction liquidity. Directly, again, a leverage ratio of three to one is something you probably want to stick with, two to one is excellent, but I just don’t want the takeaway to be 10 to one, nine to one when you get it done.

Ben Weiss:

Right, I think that’s the case. You don’t necessarily need to have two to one, but 10 to one is rare and then I’ve got one more collateral question before we move on, we got here a guy, Kevin here is asking, “Can you use a current cashflow… ” How’s he write it there? “Can you use a current website that’s generating cashflow as an asset for collateral?”

Jordan Richmond:

Getting back to that exact chart that the SBA uses, there’s tangible and intangible assets. To that listener’s point, there is cashflow there, there is enterprise value, but that’s not as the SBA deems collateral.

Ben Weiss:

Got it.

Jordan Richmond:

The deal from a cashflow standpoint is in that intangible asset is helping service the debt and we will look at that and that will help you get an approval but no, that is not SBA’s definition of collateral. We’re talking about hard assets that you take in liquidation, but again, to that listener’s point, you’re looking about what you want to put in, how much you need to put down. You have a cash flowing existing website and you’re pledging real estate, and that website is helping support the debt and all things, you’re strongly capitalized, there’s a lot of collateral in there, that’s getting you closer to that 10% deal because you’re obviously an industry expert, you’re running a deal, you’re successful, you can show that this business runs.

Ben Weiss:

Right on, all right, we got a few more, but I’ll get to them after we get through more of this presentation, so let’s jump to it

Jordan Richmond:

Yeah, cool, I’m sorry, I went too far. Tacking on the eligibility of this, people always ask, “What is eligible, can I actually get one of these loans?” It’s pretty simple, the SBA has a size standard, as long as you meet the definition of a small business and if the listener is actually viewing out there, those bullet points are a little bit off now, they go by what your NAICS code is and they say what kind of industry you are and they define the small. General rule of thumb, if you’re below 15 million tangible net worth, and you don’t have net income of over 5 million, you’re going to be eligible if the business is operating in the States and you are a US citizen.

Jordan Richmond:

There are some caveats, if a US citizen, a US business corporation is bringing assets into the States, so in other words, UK, Canadian business coming into the States to operate, that is technically eligible as well, so international transactions could potentially be okay also.

Ben Weiss:

Interesting.

Jordan Richmond:

As far as the eligibility is concerned is, you have a max loan amount of five million with the SBA, so as long as you fit that criteria, you should be okay. You cannot have defaulted on government debt, and there are a credit risk score requirements, but typically those are always met. People who want to be buying businesses and do that kind of path, they know they’re going to get approved for general credit criteria as well.

Ben Weiss:

Yeah, of course.

Jordan Richmond:

Then just very quickly, another very common area of conversation, everyone wants to know what a loan would look like and how this works. Terms are always going to be, on a goodwill deal like this, the kind of stuff Flippa is selling and processing, they’re almost always going to be tenured transactions, prime plus two and a half, prime plus 2.75 is really in general where the market is on deals like this. That’s it, today that rate would be 5.75, 6% somewhere in that area and other than that, the SBA will will charge a guarantee fee, which is to guarantee the actual loan and for the SBA to back it.

Jordan Richmond:

But other than that, a bank legally can’t charge points. They can charge an SBA packaging fee, so closing costs, legal fees, all that stuff should really be pretty parroting from where you go, from bank to bank, it’s a very standard product, and no balloons.

Ben Weiss:

Absolutely, there’s always a couple of questions I always jump into, you did some real 101 stuff here. People always ask us when should they actually start the process? Is that something they should pre-qualify for while they’re searching around on Flippa, something they should wait until they know what they want to acquire, how does that work?

Jordan Richmond:

I don’t know, a modicum amount of self screening is important. If you go to a lender like myself, asking a lender to approve a loan is like asking a surgeon for surgery is like, “Sure, I’ll cut whenever you’re ready.” If you engage me, the first thing I’m going to want to do is just look at your personal financials, look at tax returns and have an idea of what kind of business you want to buy and the amount of it. I think to start a little bit of self screening upfront is important to get an idea of what those leverage ratios will work, what kind of payments and cash flow you’re looking and extrapolate, a general amount, a range.

Jordan Richmond:

The, to your point, people go on a search, I’d have people who stay in the system for two, three years, four years. They really do need to get engaged first and have a very quick conversation, which could even be a couple of emails saying, “Here’s my financial picture” then I spit out a dollar amount and check their experience too, and make sure that’ll work and then go out and go forth. Sometimes Ben, these questions, it’s like pulling a cord on a doll, when people would ask me this stuff, but the way I put it is I can pre-screen and pre-approve it, and I just want to get it to the point where if you needed a term sheet from a business, I could submit that and get that out to you 24 hours later. You get pre-approved, you get on the search, you get me the financials and then next day, without even needing the buyer stuff, term sheet goes out and you know you have a deal and it’s an easy approval of credit.

Ben Weiss:

Right, which is fantastic because obviously things move very quick in digital acquisitions, so it sounds like it’s important to at least get in touch and kind of know what you’re in for.

Jordan Richmond:

Yeah, and not to pile onto your exact point, but like I was saying, cash buyers swoop in, more attractive buyers who are willing to put in 20%, 30% with no seller note will come in, so that stuff is important to address as well.

Ben Weiss:

Absolutely, all right, I’ll let you continue here with the options you’ve got.

Jordan Richmond:

This is just a matrix from what we have on our marketing site, but this is really where I just kind of wanted to land for the viewers and trying to make this a relatively short video, so people will actually listen to it in its entirety. This is just a list of some of the deals we’ve done recently, and I feel like this is a good place to just talk about some deal structures. Commercial lending in general is case study oriented, so we can go over a couple of these funnels, and final questions and kind of take it from there.

Ben Weiss:

Yeah, absolutely. I’ll jump into the questions just because I want to make sure people get covered. Keith’s asking here, I feel like you’ve mentioned actually a couple of times, you’ve kind of just thrown into a sentence about “You’re an expert, blah, blah, blah” so he’s asking, “Does being an expert manner, or if you’re new to online business, is that going to hurt you?”

Jordan Richmond:

Yeah, excellent question, this is the kind of stuff that goes into the SBA 201, so maybe we’ll talk about that. I like looking down the road and stuff, the phrase you’ll hear is transferable skills, and that is what we’ll underwrite too, and if the industry experience isn’t there, the transferable skills really do have to be in spades. Really to that, I think Keith, really good point to ask this question, because if you look at the PowerPoint list of transactions, I can really off some stuff here.

Jordan Richmond:

If you go to the first one, the acquisition of a Canadian SAAS company, again, that was a foreign asset coming into the States, and that’s what made it eligible to a US citizen, a US corporation, but this was this guy’s third transaction with SAAS, it was synergistic, so it was the same client list, it was the same accounting, there was a bottom line savings too, that was an easy deal to do, that’s the kind of deal we’re doing 90%.

Jordan Richmond:

Now go down about halfway to the list, where is it? The 400K gymnastics studio owner acquiring CRE for business, that’s a 10% deal, there was an existing going concern, that’s the kind of stuff we want to see. However, you look at the engineering firm we did, that was an architect who knows the industry, he had good corporate experience, he was in the industry for quite some time, we’re going to do that deal. What’s another one? I’m doing a franchise resale, and it’s like a printing thing right now, and the guy has 30 years experience of B2B retail sales management. He was just doing B2B commercial sales, and that’s what he does. Yes, he’s switching industry, as you could with SAAS and e-commerce, but you look at the pedigree and he’s good to go.

Ben Weiss:

Absolutely, there’s a good question here, because I think a lot of people who are new and looking for SBA loans in digital, they’re concerned what sort of business you’ll loan out to. Patricia in particular is asking, “Can you get an SBA loan for a content based business that’s making money purely through ad revenue?”

Jordan Richmond:

Yeah, we’ve done a few, actually one just fell apart, I did one earlier last year and they come up less frequently than… I would say e-commerce is probably the most frequent one, SAAS is also more frequent than content but yeah, absolutely, we do it. My piece of advice on that is make sure… It seems that content sites are usually co-mingled with several different other businesses for some reason. I feel like e-commerce runs their own P&L, content doesn’t for whatever reason.

Jordan Richmond:

The only thing I would say on that is we would still write a deal, say that people have five different blogs and they’re all spitting off money, and they’re only selling one kind of intellectual property, one piece of content. We would do that deal, but just bear in mind that as you’re looking at this, and the industry over SAAS, and e-commerce, it’s a risk. That is a riskier deal than just something that’s SAAS that’s been doing this thing for 10 years, you know what I mean? Just look at that as possibly needing more collateral, real estate collateral, maybe look at it being, we might ask for 5%, 10% more equity, and also make sure that the bank can understand the financials within that space. But yes, 100%, we’ve done several and we’ll continue to do so.

Ben Weiss:

I assume there’s essentially no type of digital business that you wouldn’t be able to get an SBA loan on as long as it’s a legitimate venture.

Jordan Richmond:

Yeah, really good point, so if people want to Google the word prurient, because I didn’t know it before I was an SBA lender, but we won’t finance a business of prurient nature. Something that’s unethical, scandalous, cannabis shops, they’re federally illegal, obviously we’re not going to do that stuff. The last thing, there are websites generating money not in nefarious ways, but not necessarily the most pure and ethical ways. The bank is putting their name behind those deals, so I’ve looked at especially some e-commerce stuff where I’m like, “This isn’t prurient, but I think it’s making a political statement at the least of where the bank’s heart lies.” That’s something I would rather stay away from.

Ben Weiss:

Yeah, that makes sense, I’ve got another question here. I’m going to reword it a little bit because it’s actually something I was wondering, this person’s asking essentially what our process is, or what your process is for determining an asset’s value, but I would just like to know, if someone’s working with you, with your bank and you personally, do you help them determine what an asset might be worth to purchase?

Jordan Richmond:

Yeah, so super impressed by your viewers’ questions, by the way. That’s SBA 301, so we could literally talk about this for an hour and I would love to, but the short answer is that there are two ways an appraiser will look at it, and yes, we do have to appraise the cashflow. We call it a level of appraise, it’s a business valuation and there are two ways a valuation company will do that. I’m going to really try not to get into the weeds, but it’s either a discounted cashflow model and market analysis. Basically we look at the cashflow Flippa probably does, and then you assign it to a multiple. The cashflow is the data-driven SDE, and show what the seller’s discretionary earnings really are and then the multiple gets a little bit ethereal where you have to look at the market and see what it’s getting. Those two factors combined make your value, it can’t vary from my industry to Ben’s, it’s almost identical.

Ben Weiss:

Got it, and then that same person is asking, “What’s the range of your multiple typically?”

Jordan Richmond:

Yeah, that’s a question better suited for a broker, I would say. What do I know? I don’t want to start saying things that I can’t take back.

Ben Weiss:

I agree.

Jordan Richmond:

Without saying a number in general, I would say SAAS garners typically a higher multiple, and the more EBITDA you’re spitting off, the higher it is because then you’re swimming downstream towards what private equity can pick up.

Ben Weiss:

Yeah, absolutely, we are obviously staring at that information all the time on Flippa, because we see all the sales coming through and there’s no strict answer on what the multiple is, it really depends, but same thing, anything with monthly recurring revenue in the SAAS world is going to be worth a bit more. Anything that’s a well-aged business is going to be worth a bit more, I tend to find, you know, it’s just proven success, but there’s no real answer.

Jordan Richmond:

Just a very quick caveat is just banks really do look more, and evaluators do look at forward PE, but banks really do look at trailing PE and you need to understand that, so your valuation might be a little bit off from the banks, but we’re looking in the rear view, whereas sellers, always sellers and sometimes buyers look to forward earnings.

Ben Weiss:

Cool, let’s close off, I’ve got I think just one more question here that we can cover and then we’ll call it a day. For anyone who’s been here, thank you, and then we’ll post this up on the website so you can go back and learn again, if you need to. This one is also coming from Patricia asking, “Can I get an SBA loan at the time of closing if I set up a letter of intent where the seller agrees that I, as the buyer pay down the down payment on standby to a seller over six months?”

Jordan Richmond:

That’s a good question, and I see where this person is going because you see this in commercial lending, a lot of times in franchise lending, quite a bit where you have conventional franchise people who they have 15 units, now they’re successful, there’s a ton of cashflow and they just stroke a check as they want to buy stuff and then that immediately gets traunched out to a term loan. That is typical in conventional commercial finance, but that’s more of a middle market transaction, SME kind of thing.

Jordan Richmond:

With SBA lending, especially if it’s your first, second, or any, seven, eight transaction, you’re going to need to underwrite the buyer and the seller concurrently while the business is getting valued. You’re not losing that much time, but you’re going to underwrite the whole package and then you’re typically going to wait about 30 days to close if you did evaluation upfront, 30 days I think is a fair time period. Then with COVID guys, just the last thing I’ll say, with COVID, everything’s taken longer. Cash sale or not cash sale, I don’t think anything’s that different with SBA versus cash these days.

Ben Weiss:

Yeah, absolutely. There’s a lot, as you know, there’s 101, 201, 301, 501 classes we can take here, we can go to grad school.

Jordan Richmond:

Those are jeans.

Ben Weiss:

You guys had some great questions, Jordan you’re fantastic as always, as I just mentioned a minute ago, we’re going to post this on our website, along with some information, obviously on how to get in contact with Jordan and his bank, Ameris Bank. Anyone who’s watching right now, I know that there are a couple more questions still coming in, but we can’t talk forever, unfortunately, but I will send to all of you guys here an email probably next week when this goes up and you can reach out to Jordan. It sounds like some of you might be ready to already get going on this, so that’s exciting.

Jordan Richmond:

Yeah, connect with me on LinkedIn, happy to answer questions offline and this was a lot of fun. I love the partnership, I love doing stuff like this, a lot of fun, hopefully it was good content for you guys, and anytime let’s connect.

Ben Weiss:

Awesome, well thank you, Jordan. Thanks for everyone who was watching and as Jordan said, reach out to him, reach out to me and let’s have fun. It’s money, buy some businesses, own your future.

Jordan Richmond:

Yeah, thanks again.

Ben Weiss:

All right, cheers, everybody.

Benjamin Weiss

Benjamin Weiss

Benjamin Weiss is a marketing all-star at Flippa. He has well over a decade of experience running multifaceted marketing programs within the CPG industry and knows just what it takes to drive a business from vision to reality. You will often find him enjoying a cold beer on a hot day in Austin, TX, or you can always find him on LinkedIn.