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Bill D’Alessandro (@BillDA) and Heather Endresen (@HeatherEndresen), we talk a lot about the Small Business Administration (SBA) and discuss interesting topics such as why the deals are going down and the important safety considerations for this environment. Heather also imparts a great deal of crucial knowledge on cash flow and risks that we should keep in mind in the current environment.
We also talk about an Outdoor B2B eCommerce Brand. We get to witness Heather's informative knowledge of this type of loan. Additionally, we learn about the difficulty of seasonality when leveraging a business.
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(00:00) - Introduction
(01:06) - Our sponsor is CloudBookkeeping.com
(02:33) - Guest intro: Heather Endresen
(04:06) - What is happening in the market in mid-October 2022? What’s different from previous quarters?
(05:45) - Who owns the larger companies in the space?
(07:08) - What is the median SBA rate?
(09:13) - What is the most important factor when acquiring an SMB?
(12:25) - Is there room for valuations to correct, given the rate hikes decrease the Net Present Value of future cash flow?
(13:23) - What is happening on the upper-quality end of this market, and how does that relate to the rest?
(15:03) - In today’s environment, where the risk is higher for the Bank, does it make sense to raise more equity for high-quality deals?
(16:35) - How can I know if I’m being safe from the buyer’s side?
(18:12) - Seller Notes! Things you need to know as a buyer
(20:27) - How to protect yourself with a seller note?
(22:37) - SBA Loans & personal guarantees
(26:30) - What happens in a default situation? How does the SBA operate in these cases?
(29:17) - Can I choose an asset or cash to bring into the deal as coverage if the business is underperforming?
(30:09) - Deal & financials: Outdoor B2B eCommerce Brand
(32:34) - What is the first thing that you’d ask from a Lender's perspective?
(34:21) - What is the challenge of seasonality when you’ve taken leverage on a business?
(36:37) - What is the line of credit and how does it relate to the Quality of Earnings reports?
(39:16) - The underbelly of SBA loans?
(39:56) - How does the bank get comfortable with a Deal?
(42:41) - What does SBA pre-approved really mean?
(45:35) - What’s the dynamic of Live Oak Bank?
(51:02) - Reach out to Heather!