Structuring Working Capital in SBA-Financed Acquisitions: A Strategic Guide

Structuring Working Capital in SBA-Financed Acquisitions: A Strategic Guide

When acquiring a business with an SBA 7(a) loan, one of the most important—but often overlooked—factors is working capital. Without enough liquidity post-close, even the most promising acquisitions can hit early roadblocks. At ManifestFunding.org, we help you plan ahead so your acquisition doesn’t just close—it thrives.

1. Negotiate Working Capital from the Seller

One of the simplest ways to ensure operational stability after the deal closes is to have the seller leave a set amount of working capital in the business.

Set a Target: Use the business’s 12-month average working capital as your benchmark.

Lock It In: Make sure the purchase agreement includes a clause requiring this capital to remain in the business at closing.

💡 Example: If a business averages $100,000 in monthly working capital, the agreement would mandate that amount stays in the business at handoff.

2. Build Working Capital Into Your SBA Loan

You can also add extra working capital directly into your SBA 7(a) loan.

Be Specific: Detail exactly how this money will be used—new hires, marketing campaigns, equipment upgrades, etc.

Prove ROI: Use solid financial projections to show how this capital fuels growth and supports loan repayment.

💡 Example: Planning to grow your sales team? Add $150,000 to the loan for hiring and training, backed by projected revenue gains.

3. Open an SBA Express Line of Credit

Want even more flexibility? Apply for an SBA Express Line of Credit, either alongside your SBA loan or separately.

Draw Period: Use funds as needed for up to 3 years.

Payback Terms: After the draw period, repay over a 7-year amortization.

Smart Uses: Cover short-term needs, seasonal fluctuations, or unexpected costs.

💡 Example: A business with seasonal revenue cycles can use a $250,000 line of credit to manage inventory spikes.

Combine Strategies for a Stronger Foundation

You don’t have to choose just one approach. Smart buyers often combine all three:

• Seller-Contributed Capital gives immediate post-close liquidity.
• Loan-Included Capital funds strategic growth.
• Express Credit Lines offer a safety net.
  

💡 Example Strategy: $100K from seller, $150K in the SBA loan, and a $250K credit line.

Pro Tips from the ManifestFunding.org Team

Start Early: Assess working capital needs during due diligence—not after.

Partner with Experts: We’ll work with your lender to structure a plan that covers all bases.

Educate & Prepare: We help you understand all available options so you’re never caught off guard.

Track Post-Close: Use our tools to monitor and adjust capital usage after the acquisition.
 

       Ready to Fund Your Future?

At ManifestFunding.org, we specialize in helping business buyers build smart, resilient financing strategies with our fintech lending partner. Whether you're structuring your first deal or scaling your acquisition model, we’re here to help you succeed.

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