Mergers & Acquisitions

Resources: M&A Talk Podcast

At M&A Talk we bring you exclusive interviews with experts in business sales, valuations, mergers and acquisitions and more. We talk to the most experienced professionals in the industry to uncover their secrets.

Bruce Marks on SBA Loans for M&A Transactions

Bruce Marks on SBA Loans for M&A Transactions

Bruce Marks

MBA, CMAA

If you are buying or selling a business that involves an SBA loan, this show is for you. We spend over 90 minutes discussing the many facets of SBA loans, dispelling many of the most common myths along the way. You will learn the differences between SBA and conventional loans, how the value of a business can affect the loan, how SBA guarantees work, the requirements for obtaining a loan, how transactions are structured when an SBA loan is used, and much, much more. Whether you are a buyer or a seller, this show will be invaluable to understand the mechanics of SBA 7 (a) loans.

Guest Profile

Bruce Marks helps buyers finance M&A Transactions. He brings over 34 years of SBA Lending experience with the past 10 years focused solely on Mergers & Acquisition Lending. Mr. Marks works with financial buyers, searchers, independent sponsors, and corporate buyers seeking financing for business acquisition transactions. He specializes in transactions with an Enterprise Values between $3 and $8 million dollars, having closed over 1,200 SBA Transactions. Mr. Marks is employed by First Bank of the Lake, a community bank based in Osage Beach, Missouri. FBOL offers innovative technology, product depth and personalized attention only a community bank can offer. FBOL is a National PLP Lender. Over the last 6 1/2 years, Mr. Marks has personally assisted buyers providing over $235,000,000 in SBA 7a loans to facilitate lower middle market M&A Transactions. Mr. Marks earned a B.S. Degree in finance from Salem State College in Massachusetts, and an M.B.A. Degree in Finance from Nova Southeastern University. Bruce also earned the designation of Certified Merger and Acquisition Advisor (CM&AA) and successfully completed the business valuation training through NACVA. Bruce also owned and operated a small business consulting firm for 13 years eventually selling this business and returning back to the banking business.

Company: First Bank of the Lake

Location: Fort Lauderdale, Florida

LinkedIn: https://www.linkedin.com/in/bruce-marks-mba-cmaa-7938b67/

Email: bmarks@fblake.bank

Phone: (954) 646-5820


Topics Covered

  • What is the difference between an SBA loan and a conventional loan? [2:10]
  • How do you calculate enterprise value? [4:45]
  • Is working capital and inventory included in the enterprise value and the SBA loan? [5:30]
  • Is the SBA’s role only as a guarantor? [6:30]
  • How extensive are the SBA’s requirements? [10:05]
  • Are there subjective requirements to obtain an SBA 7 (a) loan? [11:50]
  • Does the SBA require a lease term as long as the amortization period? [13:00]
  • How many pages is the SOP? How often is it updated? [14:30]
  • Do banks impose additional restrictions on top of the SBA’s requirements? [16:15]
  • What is the SBA’s role in the transaction? [17:00]
  • What is the maximum size for an SBA 7 (a) loan? [19:40]
  • What is the maximum guarantee? [23:30]
  • What is a pari passu loan? [24:30]
  • What are the different types of SBA lenders? What are the advantages of being a preferred lender? [26:00]
  • Can preferred lenders close on the loan faster than other lender types? [28:00]
  • What is a search fund transaction? [32:45]
  • How much in fees does a buyer pay for an SBA loan? [37:15]
  • Is an escrow agent required to conduct the closing? [40:30]
  • What type of business appraisal is required to obtain an SBA loan? [41:35]
  • What if the appraised value is less than the loan amount? [42:40]
  • Can the buyer increase the down payment to make up the difference between the appraised value and the loan amount? [45:45]
  • Is there a limit to how many SBA loans a buyer can obtain? [48:40]
  • Does the limit only apply to the SBA 7 (a) loan? [50:00]
  • Does the SBA publish their default rates? If so, what are the default rates? [53:00]
  • Which industries have the highest default rates? [53:50]
  • Does the SBA frown upon certain industries? [54:50]
  • How does the seller note work in combination with an SBA loan? [57:55]
  • Does every SBA transaction require a seller note? [59:20]
  • What is the minimum down payment required for an SBA loan? [1:01:15]
  • Can a buyer borrow the down payment? [1:02:45]
  • How is working capital treated? Is it included in the loan amount? [1:03:00]
  • How much flexibility do SBA lenders have? [1:04:00]
  • Can you issue a pre-approval? [1:07:30]
  • What are the maximum EBITDA multiples the SBA will allow? [1:08:05]
  • What is a credit box? [1:13:25]
  • What is the process and timeframe for obtaining an SBA loan? [1:14:20]
  • How long does the entire process take? [1:16:20]
  • What is the difference between the underwriter and the loan committee? [1:17:45]
  • Does the business need to be owner-operated? [1:19:35]
  • Can you use an SBA loan to buy out a partner? [1:20:20]
  • Can the transaction be structured as a stock sale? [1:21:30]
  • What adjustments to the financial statements are allowed when calculating EBITDA or the debt service coverage? [1:24:14]
  • What is your advice to buyers and sellers when obtaining an SBA loan? [1:28:15]

Learn More


Resources Mentioned

A Roadmap to the Successful Sale of Your Business (152 pages)

A Roadmap to the Successful Sale of Your Business (152 pages)

You could spend a lifetime figuring out how to successfully sell your business and still end up confused or clueless. What if you can stop the guesswork and start taking action now?

Read more