Financing Scenario

Custom Contractor Business Case Study

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

Business Purchase Scenario
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


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