I've sold two businesses and bought one. The biggest delay was always financing. On my last sale, we got the buyer pre-vetted with an SBA lender before listing. Closed in 67 days. Previous sale without it took almost 8 months and two buyers fell through. Has anyone else seen this make a real difference?
SBA Loans
Why getting your business pre-vetted by an SBA lender makes it sell faster
67 days is fast but SBA lenders move at their own pace. Pre-vet doesn't guarantee anything if the buyer's financials change.
What does pre-vetted actually mean here? Like the buyer gets a pre-qualification letter? Or the business itself gets vetted? Those are two different Things.
Good point. In our case the lender reviewed the business financials and the buyer's credit simultaneously. So the business was 'pre-approved' as financeable And the buyer had a soft pre-qual. Both sides knew the deal could actually fund.
I'm skeptical. Buyers say they're pre-qualified all the time. Means nothing until the underwriter actually looks at tax returns.
That's fair. But there's a difference between a buyer's bank saying 'sure we can lend you money' and an SBA lender saying 'we've reviewed this specific business and it passes our screens.' The second one kills a lot of wasted time.
Following. Considering selling my landscap ing co next year and this seems like a no brainer if it works.
Also worth noting: SBA lenders don't pre-vet for free. Some charge application fees even for the pre-screen. Make sure you're not paying for a false sense of security.
lol my last broker told me the buyer was 'pre-vetted' and the guy couldn't produce three years of personal tax returns. Turned out he was pre-vetted by a guy who sells courses on how to buy businesses.
Exactly. 'Pre-vetted' is not a regulated term. You need to know who did the vetting and what they actually looed at.
This is why I asked. If it's the seller's own SBA lender doing a preliminary review, that carries more weight than some random buyer broker's stamp of approval.
For clarity: our lender was our own contact, not the buyer's. We paid a small fee for the pre-screen. Worth every penny given the time saved. But yeah, 'pre-vetted' needs context.
So the takeaway is: vet the vetter. Ha.