The majority of business acquisitions (with or without real estate) are financed with an SB 7(a) loan. Contrary to common belief, receiving funding is not difficult when you have the right experts at the table and PET-VET is proud to have strong relationships with several SBA lenders who specialize in the pet care and veterinary sectors. Part of our full-service sales process is securing financing with one of our preferred industry lenders to ensure a smooth closing.
SBA stands for Small Business Administration, which is a federal agency that guarantees (i.e. insures) the loan up to a certain amount to the lender. The SBA does not make any loans nor provide grants, which is a common misconception. The SBA has two loan programs that are suitable for pet care financing: the 504 and 7(a). A 504 is restricted to financing commercial real estate purchases, so most of the time the 7(a) program is best suited. For information on the SBA insured loan programs, please go to: https://www.sba.gov/funding-programs/loans.
Unlike a residential mortgage loan, where only the buyer’s financials are scrutinized, the majority of a lending decision in an SBA loan falls on the business financials. The buyer has to meet certain requirements (skill set, credit score, liquid assets, down payment, etc.), but the business financials have to prove that the business is solid, generating cash flow to service the debt (ie. make the monthly payment) and take care of the buyer’s financial needs.
Cash flow is loosely defined by what the business generates after all expenses are paid, including buyer salary. It is the marriage of the buyer and the business that gets underwriting approval in a positive loan approval.
Yes, the paperwork can be daunting, but we handle the collection thereof as well as the application completion. Additionally, the lender will order a business and real estate (if included in the purchase) appraisal to ensure that the buyer is not overpaying for either.
Our firm is very skilled in structuring transactions and obtaining financing; once we understand a buyer’s skill set and financial abilities, we make recommendations on how to finance an acquisition and fulfill a dream.
Existing business owners looking to expand, buy another business, or finance equipment or inventory, email or call us to get personally connected to the top lenders for the pet care industry! Your odds of obtaining financing are much higher with our lender partners than any other bank.