Custom Contractor Case Study

Financing Scenario

Custom Contractor Business Case Study

Buyer acquired an existing custom contractor of high-end kitchen cabinets. The business had been established 20 years ago by the founder who was now retiring. This transaction was a stock sale.

Purchase Price $ 3,950,000

Loan Structure

Purchase Price $3,950,000
SBA Fees/Costs $217,250
Working Capital $100,000
Total Project Cost $4,267,250
Seller Note $395,000 (10% of Purchase Price)
Buyer Equity $426,745 (15% of the Total Project Price)
SBA 7a Loan $3,445,525

Seller Note Terms

The seller note had a term of 10 years with zero payments of principle or interest for the first 24 months.

Loan Terms

Term 10 Years
Amortization 10 Years
Estimate Payment $38,000 (approximate – based on Wall Street Journal Prime Rate + 2.75% (SBA Maximum)

Personal Credit

Average Credit Score 779

Additional Collateral Pledged

Buyer did not pledge any additional collateral for the loan as had already sold their primary residence. However, they did have a very strong cash position of approximately $2M.

Total Cost

Remember your total out of pocket costs will be higher than those costs estimated within the SBA loan as they vary by transaction. Additional costs to consider:

Life Insurance Policy
Business Insurance Policy
Title/Transfer tax on vehicles included in the sale
Attorney costs
Relocation costs

Why Work With Us?

Extensive experience helping to buy a business using the SBA 7a loan program.

There is no substitute for extensive SBA 7a financing acquisition experience. Every transaction is different. Every transaction is completely custom. These transactions require an expert to get you the best terms possible, guide you through the process from start to finish, and make sure there are no surprises on the closing statement. Choose your SBA professional carefully!

FINANCING SCENARIOS