Loan Usage
Partner Buyout Loan
Find out how to buyout a partner and grow your business
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Tight liquidity can cause financial hardships when a partner exits
Small businesses seeking financing for a partner buyout often face challenges obtaining the financing they need. According to a recent report from the Federal Reserve, 47% of small businesses that sought external financing did not receive the full amount they needed. This can be especially difficult for partner buyouts, as they typically require large sums to compensate the exiting partner.
Businesses seeking partner buyout financing also face challenges securing favorable terms. Traditional lenders often view partner buyouts as high-risk, as the business may lose a key decision-maker. As a result, interest rates on loans for buyouts can be higher, and collateral requirements more stringent.
Cash flow can also be a concern, especially when taking on debt to fund the buyout. The business must continue operations smoothly without straining its liquidity, which is often tight for small enterprises. This puts pressure on owners to find the right balance between financing the buyout and maintaining healthy finances for ongoing operations.
Simplify your partner buyout with an experienced lender
When financing a partner buyout, the SBA loan program can offer much-needed support. The SBA 7a loan is one of the most flexible options available, offering repayment terms up to 10 years and lower down payments compared to conventional loans. This makes it easier for businesses to fund large buyouts without overstraining their cash flow. The 7a loan also provides competitive interest rates, as they are partially guaranteed by the U.S. government, making lenders more willing to offer favorable terms even for high-risk transactions like buyouts.
Additionally, the SBA 504 loan can be used when the buyout involves purchasing assets or real estate tied to the business. With lower down payments and fixed interest rates, this program helps reduce the financial burden on the business.
First Bank of the Lake has been a leader in SBA lending, helping small businesses navigate complex transactions like partner buyouts. With over $1.1 billion in SBA loans funded, our experience ensures borrowers get the support they need to structure financing effectively.
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The First Bank of the Lake rep and I bonded over faith, fishing and finance. They got my loan done in under 30 days in very, very trying circumstances.
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