M&A for Main Street businesses @exitdotguide

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@ConnorAbene Working on it!

There are two camps of SBA buyers in 2025. On one hand, you have the buyers who are discouraged by the SBA’s tighter equity injection guidelines and are pulling back or shelving their search entirely. On the other hand, you have a rising class of more serious and strategic buyers—those who are leaning in, not out. My thesis? The savviest buyers in this market will raise equity to pursue larger, more meaningful companies. Rather than seeing the new SBA guidelines as a barrier, they view them as an opportunity to differentiate themselves—to professionalize, syndicate capital, and go after the kinds of deals that can actually change the trajectory of their lives and careers. In the last few years, while guidelines were more flexible, I heard from hundreds of buyers looking to do “no money down” deals—even when they were financially qualified. The updated rules raise the bar, and that’s a good thing. They shift the market’s focus to serious operators who understand that buying a business isn’t about financial engineering—it’s about leadership, scale, and long-term value creation. At @PIONEERCAPADV, we work with sponsors who are building equity syndicates and getting capital commitments in place. If you’re on the fence about raising equity, don’t be. The ETA investor landscape has matured dramatically in the last three years. Capital is more available, investors are more sophisticated, and the path to closing meaningful deals has never been clearer. You don’t need to go it alone—and in 2025, the best buyers won’t.

How to Use a Partial Standby Seller’s Note and $250K in Cash to Acquire a $5M SBA-Financed Business Here’s a real-world example of how a financially prepared buyer can close a $5 million SBA loan package using just $250,000 in personal cash—by strategically incorporating a partial standby seller’s note into the capital stack. Deal Snapshot ✔️Purchase Price: $4,650,000 ✔️Additional Costs: $350,000 (Includes working capital, SBA guarantee fee, closing costs, M&A legal counsel, and financial due diligence) ✔️Total Project Cost: $5,000,000 Capital Stack ✔️SBA 7(a) Loan (90%): $4,500,000 ✔️Equity Injection (10%): $500,000 ✔️Buyer Cash: $250,000 ✔️Seller Note on Partial Standby: $250,000 Why This Structure Works Under SBA guidelines, a seller note can count toward 50% of the required 10% down payment if it is structured on full standby for a minimum of 24 months—meaning no principal or interest payments during that period. At @PIONEERCAPADV, we recommend going further: structure the note on standby for 36 months, with amortization beginning in year 4 and continuing through year 10. This approach increases lender confidence and strengthens your position during underwriting. One Crucial Buyer Consideration Most SBA lenders will not factor future payments on the seller note into DSCR (debt service coverage ratio) calculations if the note is on full standby. That’s good for loan approval—but not an excuse to ignore the long-term impact. As the buyer, you should always model the deal’s DSCR once those payments begin in year 4. If the business doesn’t grow post-acquisition, you may find yourself with tighter cash flow than expected. Planning for that possibility is a hallmark of disciplined acquisition strategy. The Takeaway: A partial standby seller’s note, when structured correctly, can significantly expand your buying power. But the key is pairing smart structure with forward-looking financial analysis. That’s how deals get done—and stay healthy. If you’re exploring an acquisition and plan to use SBA 7(a) financing of $1 million or more, I’d be glad to connect and help you think through the capital stack. Please feel free to reach out to me via email - [email protected]

@ianncushing linkedin.com/in/jonkeel/

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How will AI impact the M&A industry? Check out this month's edition. AcquisitionAficionado.com

@julia_hornstein @BusinessInsider Hello!

Invest in your exit the way you would invest in your business.

Messy financials kill deals! Get free insights from a bookkeeping expert on how to prepare your financials. October 23 us06web.zoom.us/webinar/regist…

Hey small business owners, our free webinar fo October is open for registration. us06web.zoom.us/webinar/regist…

Preparing and navigating small business exits with Eric Grafstrom. @exitdotguide rss.com/podcasts/visio…

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Small business owners, join us for a free 30 minute event Wednesday, September 18. We talk with Juliet Peters from Framework Legal about selling a small business. us06web.zoom.us/webinar/regist…

Small business owners, join us on October 18 as we talk with Juliet Peters from Framework Legal about selling your business us06web.zoom.us/webinar/regist…

This is great insight - like most things in business, it pays to know your options.

Matthias Smith, CEO - Pioneer Capital Advisory LLC @SBA_Matthias

2 years ago

One question I get asked a lot is about interest rates in the business buying space (very important) The interest rate that a bank will issue depends on the income model of the bank The vast majority of banks in the SBA lending space depend on selling their SBA loans on the

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Own a small business? youtu.be/gs9pRZxbwUI

Understanding Seller Notes in Business Acquisitions: Essential Insights for Buyers Seller notes are pivotal tools for structuring M&A deals. Below, I outline various types of seller notes that you, as a business buyer, can leverage to finance your acquisition. Part 1: Down Payment Seller Notes Full Standby Seller Note: This note meets SBA requirements for the 10% equity injection. It accrues interest while the SBA loan is active, but no payments (principal or interest) are made until the SBA loan is fully repaid. For deals without real estate, this means the seller must wait up to 10 years for payment. Partial Standby Seller Note (Type 1): No payments are made for the first two years post-closing, with interest accruing during this period. From the third year, payments commence, aligning with the 10-year term of the SBA loan for non-real estate acquisitions. Partial Standby Seller Note (Type 2): This note allows interest-only payments after closing if the buyer can demonstrate the business’s historical ability to support such payments. It requires at least 25% of the down payment to come from a source outside the seller’s note. Note for Buyers: Most banks that Pioneer Capital Advisory collaborates with accept standby seller notes for up to half of the SBA-required down payment. However, banks generally prefer that half of the down payment comes directly from buyers or investors. Part 2: Non Down Payment Seller Notes Non-Forgivable, Non-Down Payment Seller Note: This is a common structure with a defined payment schedule. For example, a $300,000 note at 7% interest, amortized over 10 years, with a balloon payment at the end of year four, resulting in monthly payments of approximately $3,483.25. At the end of year four, the remaining balance (~$204,308.35) must be refinanced or paid off. Forgivable Non-Down Payment Seller Note: This note's repayment is contingent on meeting specific financial benchmarks. For instance, if 2023 revenue is set as the benchmark, and it is not met within the first 18 months post-closing, payments are paused and reassessed quarterly. Creative terms can include balance reductions if the business underperforms. SBA Form 155 (Standby Creditor Agreement): For any seller note in your acquisition deal, an SBA Standby Creditor Agreement is required. This document positions the seller as a junior creditor behind the SBA lender. Although a boilerplate version is available on the SBA’s website, the final document is customized by the SBA lender’s counsel based on the seller note type. I trust this information will be helpful as you navigate your business acquisition. Each SBA lending institution has unique requirements regarding seller notes, so it is crucial to understand both SBA allowances and bank preferences. For further insights, subscribe to my upcoming newsletter: matthiassmith.ck.page/9a8d793e12 If you are a business buyer looking to discuss your acquisition, feel free to contact me at [email protected].

@ClintFiore We help small business owners create a plan for. exiting their business. Either D.I.Y. or with help exitguide.com/we-help-financ…