FROM MIKE'S DESK
I watched a buyer lose a deal last year that he should have closed. The business was solid. The price was right. The math worked. The problem was him - specifically, his credit history from four years ago that he had completely forgotten about.
He had done what most buyers do: found a deal he liked, negotiated a letter of intent, started due diligence, and then - sixty days in, with a seller who had turned away other offers - applied for SBA financing. The lender pulled his credit, found a charge-off from a business he had closed during the pandemic, and declined the application. Deal died. Seller moved on. Sixty days of work, gone.
Here is what nobody tells first-time buyers about SBA qualification: the bank is not just evaluating the business. They are evaluating you. Your personal credit, your liquidity, your personal financial statement, your business history - all of it goes through underwriting alongside the deal. And the standards are stricter than most people expect. A bankruptcy within the last seven years can disqualify you. A pattern of late payments can reduce your loan amount. A prior SBA loan that ended badly is often an automatic decline.
The trap is timing. Most buyers treat SBA pre-qualification as something that happens after they find a deal. That is backwards. By the time you are sixty days into due diligence, you have already made commitments - to the seller, to the broker, sometimes to an attorney. Walking away because of a qualification problem you could have caught in week one is an expensive, avoidable lesson.
I tell everyone who comes through my program: get pre-qualified before you make your first offer. Not pre-approved for a specific deal - pre-qualified as a borrower. Know your credit profile. Know what a lender will see when they pull your file. If there are problems, you have time to address them or structure around them. If there are no problems, you walk into every offer with the confidence that the financing side of the equation is not going to blow up your deal.
The buyer I mentioned eventually closed a different deal eight months later. He had spent those eight months cleaning up his credit file and working with an SBA lender to understand exactly what they needed to see. He closed at a better price on a better business than the one he lost. But he did not need to learn that lesson the hard way.
The Bulletproof method covers the business side of the equation - the five criteria that tell you whether a deal is worth pursuing. The masterclass covers the buyer side too, including what lenders actually look for and how to position yourself before you start making offers.
Want to see how I stress-test every deal against cost shocks, revenue dips, and hidden liabilities before I'd put a dollar at risk? I walk through the entire Bulletproof method in a free 28-minute masterclass.
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