Using SBA Loans To Buy & Sell Ecommerce Businesses With Stephen Speer

[Download Our SBA Starter Kit PDF]

Episode Highlights:

• How the SBA aspect of buying and selling online businesses is becoming more prevalent.
• Stephan has been lending for 25 years and is now located in Tampa, Florida.
• He works in the ecommerce business acquisition space.
• He has been with BankUnited for the last two years.
• The SBA allows lenders to take a greater risk by guaranteeing 75% of that loan.
• The purpose is to encourage small business lending.
• Stephen has formed an ecommerce lending team around him.
• BankUnited is a preferred lender and everything is underwritten and funded in house, but the loan has the SBA default guarantee.
• Buyer qualifications include income, assets, assets after closing, credit, and collateral. Does the actual business cash flow based on the structure of the deal.
• Asking the right questions to make sure the buyer is the right fit for the ecommerce space and business that they are purchasing.
• Getting financials up front and looking at a solid year of tax returns and a ramp up year.
• How most sellers in ecommerce sell within three years because the trajectory is going up in large multiples.
• Profit and loss statement plus addbacks equal total earnings. Interest and one time expenses area add backs. Most people want to minimize their tax exposure.
• Do not commingle two businesses together when you are trying to sell one.
• Getting off of schedule cs and doing business tax returns.
• Having an independent third party do a business valuation.
• Have someone do ecommerce due diligence to poke holes in the financials.
• 25% injection or down payment with 10 or 15 from the buyer and 10 or 15 from the seller in a seller note.
• In 2018, the buyer will only have to come up with a 10% injection, and the seller won’t have to come up with anything.
• This will have more sellers open to financing.
• BankUnited feels comfortable up to a $5 million loan. There are different variables, but with the right buyer they can go high.
• They will work with buyers on the SBA process.
• What does an SBA loan cost? There is a deposit for third party fees like business valuation, appraisal, titles, and attorneys. It’s usually about $12,000 that is financed into the loan. Plus a 3.5% SBA fee.
• It the deal falls apart the money can be used on the next deal.  

Resources:

• BankUnited Small Business Finance
• 629 South Fort Harrison Avenue
• Clearwater, FL 33755
• 813.382.7543
• [email protected]
• BankUnited.com/SBF
• How To Buy An Online Business With A SBA Loan – Updated for 2017
• Centurica