Small Business Spotlight

SBA 7(A) Lending

Experienced Employee Acquires Fire Safety Business

Learn how we were able to finance this deal for a long time employee to purchase this company with creative financing and low money down. 

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Loan Amount

$3,664,000

Loan Purpose

SBA 7(a) Business Acquisition

The Small Business

Guardian South, Inc | Ramona, CA

The Financing Challenge

When an experienced employee of a fire safety
business decided he wanted to purchase the
company from the existing owners, he had a couple
of challenges to overcome. The seller was planning to
retire and sell his business to the borrower who had
over 10 years of experience and knowledge to keep
the company going. There was little to no collateral
from the buyer as well as the inability to put down
the preferred 10% down payment. Other lenders were
struggling to get the deal done, but by having the
seller provide a seller note that was able to be used
towards the borrower’s required down payment, we
came up with a solution for the borrower and seller
to work together and turn it into a success story.
The business specializes in fire protection services
to ensure safety, property preservation, and peace
of mind for clients. They provide design, installation,
maintenance, and repair of fire sprinkler systems
focusing primarily on commercial buildings. It was
important to keep this business alive and continue the
legacy of a thriving business with loyal employees.

SBA 7(a) Loan Scenario

Here's what our borrower brought to Ready Capital

Business Experience

Extensive business experience with the current company.

Established Business

Established business operating since 1998 with good cash flow.

Collateral Shortfall

Very little collateral.

CREATIVE SOLUTION

Due to the borrower’s extensive experience and the direct change of ownership of the business, this was considered less of a risky deal. The new guidelines from the SBA played a large part as well in that most of the down payment was able to come from the seller note to make up for the required 10%. The borrower put down less than 1.5% out of his own pocket to purchase this business. We were able to use the seller financing and get this deal done versus other lenders who were not willing to follow the same guidelines. Since the borrower had over 10 years of working with the business, it was a smooth transition, and key employees could be retained to continue the success of the business.

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Reliable Results

  • Continue to operate the business while retaining all existing employees and paying their salaries.
  • Maintain a profitable business with the opportunity to grow.
  • The business can continue providing services that offer fire safety and security.

The Non-Bank SBA Preferred Lender Difference

A small business loan is not an empty box like a checking or savings account. No two small businesses are alike when it comes to their financing needs. This means that small business financing requires out-of-the-box thinking and capabilities many banks simply can’t offer.

Ready Capital is a non-bank, SBA preferred lending partner (PLP). We speak fluent small business and have the process in place to help them reach their goals the first time.

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