I am really taken back by how much support I have received since launching the blog. Thank You! Many people have asked about my experience so far, what it took, and how much time I have spent working on getting to where I am in the process. I thought that I would break down the journey:
What did I learn? The first lesson is that it takes a lot longer than you would think to source and close a transaction. It seems very obvious but if you are like me, you are impatient & optimistic. I really thought that the first deal I worked on would close despite being given advice to the contrary. The second thing I learned is that spending a little bit of money on some professional help in diligence can save you a lot of money in the long run. Thanks Centurica!
What would I do differently? I think I would have liked to better understand the SBA process when I started this journey. I really thought that the banks would be in the business of lending since the SBA backed 75% – 85% of the loan. I was wrong.
This chart doesn’t even include the 1,115 alert emails, hundreds of emails with different brokers, dozens of calls with brokers.
What did I learn? Vetting deals takes a lot of time. I really underestimated how much I would have to wade through. By the end of it, I was pretty efficient and could look at deals quickly but at the beginning, I wasted a lot of time. Although upon reflection, it was a necessary process.
What would I do differently? I wish I there was a resource that pointed me in the right direction and cut out a lot of the BS. This is especially true with the brokers. Someone should write a blog about this! 🙂
What did I learn? It costs a lot of money to get an SBA loan. Not only are there a lot of fees to the SBA, but you need a document packager and a valuation commissioned by the bank.
What would I do differently? So far, I believe that I have spent money wisely and strategically. I couldn’t avoid SBA fees, the Rhodium conference was worth its weight in gold, and legal is legal. Hopefully I spend money this well while running the business!
What did I learn? The main lesson here was that just because the SBA will guarantee up to 85% of the loan, that doesn’t mean that will be the case for you. In my case, I put up no collateral so the LTV ratio (loan to value) had to be lower. Additionally, I didn’t think about how much working capital I would need in buying this business. I always knew I would need it but when I signed on to buy a business that was probably 2x larger than I thought I would, I didn’t internalize the extra cash I would need.
What would I do differently? I am not sure there is anything to do different here. I am pretty happy with the way the funding came out.
Looking at the above, it really seems like a lot of work. Truthfully, it was time but not work. I enjoyed every minute and had a lot of fun….except for almost getting scammed and getting turned down by 12 banks. That was no fun.
“Find something you love to do and you’ll never have to work a day in your life”UNKNOWN