Preparing your Restaurant for Sale

FOR SALE Houston-Area Small-batch Craft Brewery and Taproom

FOR SALE Houston-Area Small-batch Craft Brewery and Taproom

Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

The Company is a well-established greater Houston-area, craft small-batch brewery and taproom producing high quality artisanal beers, served in their tap room and around the region. The company serves in their taproom and distributes draft beer to local bars and restaurants.

They brew a broad range of styles in addition to their customers’ most popular beers. Drawing from a repertoire of over 50+ beers and counting, typically brewed in small batches, the business is well-established with a loyal following built over its long and profitable history.  Though the greater Houston area has over 70 breweries and brewpubs, this brewery is regularly mentioned as one of Houston’s best breweries.  Sales are approximately 54% Taproom, 26% beer to go, 16% Self-distribution Kegs and 4% other/merchandise.  The business is very profitable.  The seller states that the business has excellent matching books & records and that they can prove all sales, expenses and income.

The craft brewery offers award-winning beers in a relaxing, spacious environment.  The American beer lover craves variety and novel beer experiences, and this brewery has the distinct advantage of offering an exclusive experience that both beer lovers and non-beer lovers seek.  Their customers are primarily local patrons looking for a unique, one-of-a-kind experience.

The brewery equipment was manufactured by one of the top producers in the brewery industry.  Current lead time for this equipment is approximately 12-18 months.  The equipment was designed to provide maximum versatility.  The brewhouse and every tank were designed for space and flexibility, taking advantage of the brewhouse layout.  The business has plenty of additional production and capacity that a new owner could utilize.

Although the industry is very competitive, the business has superior beer, excellent customer service and a destination venue with many growth opportunities.  The business also has excellent books & records and is recession-resistant.  The brewery is operating at about 60% capacity, allowing substantial growth with little to no incremental investment.  There are many opportunities to increase sales and profits.  Annual capacity can be increased by adding fermentation tanks, varying production methods, beer selection and production scheduling.  As this craft brewer continues to grow its loyal fanbase, there is an IMMEDIATE opportunity to further expand sales and distribution through the Houston region.

Employees:   The business operates with well-trained, satisfied, motivated employees, plus a part-time owner overseeing the business.  Employees enjoy working at the brewery and handle 95% of the business operations.  The owner believes that all managers, brewers and staff are willing to stay.

Facilities: The business occupies a long-term leased space, leased at $6500/mo including NNN.

Competition:  The craft beer industry is very competitive. The business attracts customers from the local neighborhood and major metro areas in Houston, Texas. Though the greater Houston area has over 70 breweries and brewpubs, this brewery is regularly mentioned as one of Houston’s best breweries. Despite the presence of competitors, the business has quickly developed a loyal following and has substantial growth opportunities.

Growth & Expansion:  Beer is sold primarily via a) on-site sales (taproom and “To Go”) and b) off-site account sales. The brewery operates at approximately 60% capacity. There is plenty of existing capacity that can be sold at high margin. A new, energetic owner can further increase sales & profits in many ways: 1) Increase outside sales, 2) Increase production and distribution, 3) Expand tap room and open hours, 4) Add food or kitchen. More detailed actions are described in the Confidential Business Profile.Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

Support & Training:  Seller will train buyer for 8 weeks included with the purchase price. Seller is willing to provide additional training at mutually agreeable fixed compensation to assist with general management functions for a finite period.

Reason for Selling:  Relocation after successful transition

Price:  The asking price for the assets of the business is $825,000 with $125,000 cash due at closing, assumption of 1) keg deposits of $4,000 and 2) Gift Cards of $1,600 (valued at 80% of outstanding balance) and balance financed by an SBA 7a loan. The seller is willing to finance up to 10% of the purchase price to a purchaser qualified/approved by the Seller, if required by a commercial lender. THE SELLER PREFERS TO SELL FOR ALL-CASH. All financing is to be personally guaranteed. The assets include inventory of $37,000, Accounts Receivables of $0 (no billed accounts) and FFEV (Furniture, Fixtures, Equipment and Vehicle) valued at $250,000. Inventory such as kegs, materials and merchandise will be valued at cost. WIP (Work in Process) and Finished Goods, will be collectively valued at raw materials cost + 50% of the difference between selling price and raw materials cost. The price will be adjusted for actual inventory, work in process (WIP), outstanding gift cards and accounts receivables as of the sale date

NOTE: The sale of a business is confidential and discreet; PLEASE DO NOT VISIT THE BUSINESS OR SPEAK WITH ANY EMPLOYEES.

 The seller is willing to finance up to 20% of the purchase price to a purchaser qualified/approved by the Seller, if required by a commercial lender but THE SELLER PREFERS TO SELL FOR ALL-CASH. All financing is to be personally guaranteed. The assets include inventory at cost of $75,000, Accounts Receivables of $00 (no billed accounts) and FFEV (Furniture, Fixtures, Equipment and Vehicles) valued at $600,000.

NOTE: The sale of a business is confidential and discreet; PLEASE DO NOT VISIT THE BUSINESS OR SPEAK WITH ANY EMPLOYEES.

We know about many businesses that are for sale but might not be advertised. Check out www.megabite-rb.com for more information and consider registering your criteria as a purchaser.


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

For information, reference Houston-Area Small-batch Craft Brewery and Taproom for Sale 19988 and contact Jeff Adam, PE, MCBC, FRC, CBB at Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Not the Dallas-area Brewpub on Autopilot for Sale that you’re looking for?  Tell us at BUY A RESTAURANT BAR OR NIGHTCLUB and we’ll reach out with new opportunities that fit your search criteria as they arise.  Thinking of selling:  Contact us TODAY to Sell your Business

KEY WORDS: pub sportsbar beer whiskey liquor alcohol craft draft craft billiards pool grill tavern inn local neighborhood lounge country microbrewery bartender beer brewery brewpub hops malt yeast ale lager pilsner bock craft draft Sell my Scalable, Profitable Dallas-area Brewpub Eatery Business for Sale

American Rescue Plan – Tax Provisions You Need to Know

Last week, the American Rescue Plan was passed by Congress and signed into law by President Biden. Among the bill’s approximately 5,000 pages, which provide funding to a myriad of projects, a portion provides COVID-19 relief to many individuals and businesses.

The bill is multi-faceted, with different elements dedicated to small businesses, schools, healthcare providers, agricultural suppliers and more. Additionally, the bill includes numerous tax provisions that you should be aware of this tax season, including:Concierge business brokerage and business valuation services to exceptional Texas business owners

  • Unemployment benefits
  • Recovery rebates
  • COBRA continuation coverage
  • Child tax credit
  • Earned income tax credit
  • Child and dependent care credit
  • Family and sick leave credits
  • Employee retention credit
  • Premium tax credit
  • Student loans

For a full list and analysis of the tax provisions included in the American Rescue Plan, we recommend you check out this helpful article from the Journal of Accountancy: “American Rescue Plan Act passes with many tax components.”


We know about many businesses that are for sale but might not be advertised. Check out www.megabite-rb.com for more information and consider registering your criteria as a purchaser.


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

For information, reference Dallas-area Brewpub on Autopilot for Sale 19850 and contact Jeff Adam, PE, MCBC, FRC, CBB at Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Thinking of selling:  Contact us TODAY to Sell your Business

SOLD !! Dallas-area Brewpub on Autopilot for Sale

Scalable, Profitable Dallas-area Brewpub on Autopilot for Sale

Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsMegaBite Restaurant Brokers LLC offers, for your ownership consideration, a well-established neighborhood Dallas-area brewpub for sale offering their own on-site freshly crafted, high quality beers (plus a full bar), niche, healthy cooking and delicious food with a year round outdoor patio. The restaurant has cultivated a loyal, growing clientele with its popular menu and freshly brewed beers on tap.

Their most popular product lines include a double IPA, light lager, wheat, bock and blonde ale, all brewed in 15 barrel batches. The beers and foods are well-rated in all usual, popular social media. Estimated annual capacity is approximately 2,000 BBLs (31 gallon/BBL) and can be further increased by adding fermentation tanks, varying production methods and production scheduling.  The business operates with site management and minimal oversight from the owner.

2019 Sales are approximately $2,680,000 with approximate cash flow to owner of $580,000.  Although the industry is very competitive, the business has superior beer, delicious food, excellent customer service and a destination venue with many growth opportunities. The business also has excellent books & records and is recession-resistant. The brewery operations are operating at about 25% capacity, allowing substantial growth with little to no incremental investment. The business is also exceptionally well-rated by its customers, peers and judges.

SOLD !! We can sell YOUR BrewPub or Craft Brewery, too!


“We built a very successful brewpub in Rowlett, thanks to great employees and customers. Jeff’s firm completed a business valuation and then found an awesome buyer for the business. I recommend using his business valuation and sale services!”

Kevin Lefere, President, Bankhead Brewing Co. LLC


Recent brewer statistics report that there are approximately ~104 craft brewpubs and ~179 craft microbreweries in Texas (Source: Brewers Association, 2020). While overall beer volume sales were down ~1% in 2018, craft brewer sales continued to grow at a rate of ~7%, reaching ~13.2% of the US beer market.

Mintel food and drink analyst Beth Bloom says “There is a strong sense of community in the craft beer world. Consumers like to share knowledge with one another and are highly invested in the products that they choose. Not only that, but craft brands share exposure through collaboration, a practice almost wholly unique to the craft beer market. As such, tap rooms, bottle shops, and beer-garden-style breweries, where craft beer can be discovered, discussed, consumed on-site, and even purchased for at-home enjoyment, make for a complete, customizable experience. Craft beer is not only a beverage choice; it appears to be a lifestyle choice.” Mintel goes on to report that more than half of craft drinkers like to share their knowledge of beer with others, which has helped thrust many small brewers into the limelight, as word of mouth is often their strongest ally.

Texas is no exception and THIS brewpub represents an exciting proven way to IMMEDIATELY gain access to the market with an established, profitable beerpub eatery! Texas Beer Industry Growth – In 2018 Texas ranked 3rd in the nation with a $5.1 billion economic impact. Texas ranks 46th in the nation with only 1.4 breweries/brewpubs per capita (per 100,000 21+ adults). Oregon ranks 4th in the nation with nearly 8.5 breweries/brewpubs per capita. The contrast between the numbers for Texas versus a state like Oregon illustrates the potential growth in the craft beer industry. In Texas’s recent legislative sessions, this company’s specific niche ended up the biggest winners; brewpubs — hybrid retail drinking and dining establishments that primarily make and sell their own beer. Texas currently has approximately 283 craft breweries with approximately 104 brewpubs. In last year’s legislative session, our specific niche ended up the biggest winners; brewpubs — hybrid retail drinking and dining establishments that primarily make and sell their own beer. Texas currently has approximately 104 of them.

Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

 The seller is willing to finance up to 20% of the purchase price to a purchaser qualified/approved by the Seller, if required by a commercial lender but THE SELLER PREFERS TO SELL FOR ALL-CASH. All financing is to be personally guaranteed. The assets include inventory at cost of $75,000, Accounts Receivables of $00 (no billed accounts) and FFEV (Furniture, Fixtures, Equipment and Vehicles) valued at $600,000.

NOTE: The sale of a business is confidential and discreet; PLEASE DO NOT VISIT THE BUSINESS OR SPEAK WITH ANY EMPLOYEES.

We know about many businesses that are for sale but might not be advertised. Check out www.megabite-rb.com for more information and consider registering your criteria as a purchaser.


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

For information, reference Dallas-area Brewpub on Autopilot for Sale 19850 and contact Jeff Adam, PE, MCBC, FRC, CBB at Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Not the Dallas-area Brewpub on Autopilot for Sale that you’re looking for?  Tell us at BUY A RESTAURANT BAR OR NIGHTCLUB and we’ll reach out with new opportunities that fit your search criteria as they arise.  Thinking of selling:  Contact us TODAY to Sell your Business

KEY WORDS: pub sportsbar beer whiskey liquor alcohol craft draft craft billiards pool grill tavern inn local neighborhood lounge country microbrewery bartender beer brewery brewpub hops malt yeast ale lager pilsner bock craft draft Sell my Scalable, Profitable Dallas-area Brewpub Eatery Business for Sale

Full-service Dallas Seafood Restaurant for Sale – SOLD

Full-service Dallas Seafood Restaurant for Sale

Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsMegaBite Restaurant Brokers LLC offers, for your ownership consideration, a full-service family owned seafood restaurant offering the freshest seafood available! Established 20+ years, the restaurant offers moderately priced fresh seafood to business persons at lunch and families/couples at dinner. The menu caters to health conscious patrons and above average income people wanting fresh seafood. An extensive wine list is paired with a full service bar. Chicken, pasta and steak are on the menu, too, with numerous daily specials. Over the years, the restaurant has developed an extensive following, catering to business groups at lunch and families or couples for dinner. Guests enjoy a quiet atmosphere where they can carry on a conversation. The restaurant has developed a loyal and dedicated clientele with many growth opportunities for an owner-operator.

SOLD !! We can sell YOUR Full-service Dallas Seafood Restaurant, too !  Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

Sales are ~$1,550,000 +/-  with cash flow to owner operator of approximately $130,000 — 160,000/yr.

For information, contact us and reference Full-service Dallas Seafood Restaurant for Sale 19746Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisals

Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Not the Full-service Dallas Seafood Restaurant for Sale you’re looking for?  Tell us at BUY A RESTAURANT BAR OR NIGHTCLUB and we’ll reach out with new opportunities that fit your search criteria as they arise.  Thinking of selling:  Contact us TODAY to Sell your Business

KEY WORDS: salmon shrimp red snapper tuna flounder ceviche mahi mahi halibut maine lobster bisque oysters clam crab cod calamari Sell my full-service dallas seafood Restaurant For Sale

Megabite Restaurant Brokers SOLD our Viceroy Indian Restaurant – We can sell YOUR’s Too !

Megabite Restaurant Brokers SOLD our Viceroy Indian Restaurant

Megabite Restaurant Brokers, representing the Seller, recently transferred ownership of a successful Indian restaurant in the North Plano Frisco Texas market.

“Thank you for quickly finding a great buyer at a great price.  I am ready for retirement!”, said Amarender Reddy, the Seller.  Amarender was quickly presented with several buyers.  He recently completed the transition training with the new owners and wishes them every success !

Top 5 Reasons to Sell a Restaurant

If you are a restauranteur, then you already know the two HAPPIEST days in an restauranteur‘s life: the day you START or BUY your business and the day you SELL your business. Sadly, many owners wait until they MUST sell due to economic or emotional reasons. Anxiety can force you to accept an offer that simply is NOT GOOD for you.

1) Illness or Death. This is by far the most common reason to sell a restaurant and it is, sadly, a very unhappy one! Ill health (either our own or that of our loved ones) has a sobering effect on us. We tend to immediately realign our priorities.
2) Desire to ‘Cash out’. When most of our personal wealth is tied up in our business, the prospect of a sale offers an opportunity to convert our holdings into cash, diversify our investments and enjoy our newly liquid resources.
3) Anxiety. There are tremendous rewards in the ownership of a restaurant. Unfortunately, personal stresses can accumulate over a long period of time. The list of stressors is extensive: difficult employees, theft, tight deadlines, making payroll, personal financial guarantees, taxes, complying with health inspections, reinventing your restaurant concept, …. There is a point where the stress hits OVERLOAD, we feel saturated and need to sell!
4) Retirement. Although many entrepreneurs never consider this possibility, the inevitable problem of age emerges. The secret is to find the optimal timing so that the sale happens at a time of our choosing.
5) Burnout. After living on the edge for years, many entrepreneurs simply burn out and look to forward to reducing the incessant pressure. They choose to pursue other interests that challenge their knowledge, skills and ability. Selling their restaurant can pave the way to new professional and personal opportunities

 


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsMegabite Restaurant Brokers can help you buy, sell or value a restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.  Thinking of selling:  Contact us TODAY to Sell your Business

For more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161   www.megabite-rb.com 

10 Questions to Ask Every Acquisition Target

10 Questions to Ask Every Acquisition Target

70% to 90% of all acquisitions fail to achieve the results acquirers want. Why? Most often, failure is directly tied to the integration plan and frequently, to diligence that wasn’t quite as effective as it could be.Concierge business brokerage and business valuation services to exceptional Dallas - Fort Worth business owners

According to a 2015 industry study by McKinsey & Company, companies with the best M&A results have strong capabilities in post-close integration. As a consulting firm, we’ve found that high performing M&A firms use the diligence exercise to gain critical insight into the target company, its management, key employees, its culture, and its customer relationships. They take a hard look at not only the financial numbers, but at the intangible assets that drive a company’s success plan. Most importantly, they have tools and processes to statistically document the value of the intangible and help them see into the future. They start building relationships with the potential target throughout the due diligence process, months before close.

In every case, the expectation post-close is that the value of the deal will increase. So how do you predict future success? Here are ten questions our highest performing clients ask every potential acquisition:

1. How closely aligned is the target company to its customers, and specifically to customers’ needs and expectations?

2. Who are the target company’s best customers (those who buy the most)? How do those customers perceive the company’s strengths and areas for improvement?

3. What are the industry’s key attributes — e., why a customer selects one company to do business with over another — and how does the target company perform against those attributes?

4. What is the customer concentration? Is it good for the long-term? How much of the business’s revenues are controlled by only a select few? Is there still more growth to be had from these few customers? If so, how?

5. What is the company’s share of wallet by customer (not just market share)?

6. What are customers’ perspectives on industry competition and how the target company compares?

7. What unmet or underserved needs do customers have, not only from the target company but from the industry? Where are the opportunities that have not been capitalized on?

8. What is the cultural fit (if a bolt-on) or the cultural opportunity (if structuring a new platform)? How hard will it be for existing management and staff to execute a future roadmap that is both operationally-oriented and customer-centric?

9. What are the priorities and action plan post-close? (The acquirer and acquired should collaborate on this plan before the deal is closed.)

10. Where are the starting points? This enables acquirers to determine what the impact the acquisition has on overall performance. To do this, an acquirer should measure not only the synergistic savings and revenue Increases, but also how much improvement there is in customer loyalty, satisfaction, and share of wallet. 


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsFor more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Megabite Restaurant Brokers can help you buy, sell or value a restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.

Recurring Revenue Increases Business Value – CALL OR EMAIL TODAY

How Recurring Revenue Increases Business Value

When it comes time to sell their businesses, the first question that most owners ask is: “How much can I get?” It makes sense. Owners are eager to cash in and be rewarded for all of the hard work they have poured into their businesses over the years.

But the reality is that for many businesses, the initial valuation will be a much lower number than their owners want to see. In order to net enough from the sale (after taxes and fees) to fund the rest of their lives, most owners will have to work to boost the value of their businesses – sometimes significantly.

One great way to create value is to build recurring revenue into your business model.

The Benefits of Recurring Revenue

Recurring revenue is guaranteed revenue for some period of time (for example, through a product subscription). Because this type of revenue does not require the same level of sales and owner effort as one-time revenue, it typically results in much higher profit margins and is always highly coveted by buyers. The evidence shows us that businesses with recurring revenue models have higher valuations than those that don’t. In 2012, Adobe went from a one-time purchase model of its software to a monthly subscription model. Two years later, its market cap was $35.5B versus $16B – a 115% increase.

Examples of recurring revenue include:

  • Service or maintenance agreements
  • Consumable product or replacement part contracts
  • Subscriptions for products, services, or information
  • Memberships

Recurring revenue is stable and predictable income, and as such results in higher customer lifetime value. In addition, recurring revenue can help your business weather economic recessions and is likely to simplify your business operations in many ways.

Understanding the Value of Your Business from a Buyer’s Perspective

Companies on a growth trajectory that can demonstrate increasing cash flows through new customer acquisition, current customer retention, and increasing market share are always much more attractive to a buyer than those that have shown little growth. Buyers want to know that revenue and cash flow are growing at a steady rate and will continue to do so in the future. And a recurring revenue model can be a great way to increase the value of the business in the eyes of a potential buyer. In Cashing Out of Your Business – Your Last Great Deal, we discuss 8 key drivers of business value that owners need to focus on before selling their businesses:

  • Increasing Revenue & Profits
  • Future Growth Potential
  • Accurate Financial Statements
  • Solid Management Team
  • Quality Products & Services
  • Strong Sales & Marketing
  • Eliminating Business Risk
  • Putting Systems & Processes in Place

Adding a recurring business model is one of the best ways to address a few of these value drivers, boost profits, and enhance future growth potential — thereby increasing the value of a business in the eyes of a prospective buyer.

Even well-established businesses can usually add some kind of recurring revenue to their model and reap these rewards. It may require that owners think “outside the box” or change how they have operated historically, but it will pay off in the long term. Buyers will pay more for quality companies and those that have growth potential.

By assessing your business objectively, you will be able to identify areas for improvement so buyers will see your business in the best possible light. Planning in advance will give you time to improve your business and maximize its value. As a result, you will improve your chances of selling and obtaining the highest price for your business.  


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsFor more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Megabite Restaurant Brokers can help you buy, sell or value a restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.

Navigating SBA Financing for Acquisitions – CALL OR EMAIL NOW

Top 5 Tips for Navigating SBA Financing for Acquisitions

The U.S. Small Business Administration (SBA), is a government agency that offers support to small businesses through contracting, counseling and capital.

SBA loans have a reputation for being hard to access, for good reason. SBA loans can be particularly tricky to secure if you’re using that capital to acquire a business. If you’ve never gone through the SBA financing process before, it can be confusing. Heck — it can be confusing even if you have gone through the process before.

To ease the pain, here are five tips for navigating the complex process of gaining SBA financing for a business acquisition:

1. Shop around for the right bank.

While you may want to secure an SBA loan from your current bank, limiting your options may lower your chances of success. For your reference, the SBA website has a list of the 100 most active SBA lenders. See who is in your area and go talk to them.

When you do, here are some good questions to ask:

  • How many SBA deals has the bank done in the past two years?
  • How many SBA deals has the loan officer done in the past two years?
  • What was the average size of those SBA deals?
  • Did the loan include real estate? (This will help you know how they expect to collateralize the deal)

2. Understand the distinction between PLP vs CLP.

There are two main SBA programs that banks can be a part of: Preferred Lenders Program (PLP) or Certified Lenders Program (CLP). Knowing the distinctions between each program can help you understand what type of lender is right for you.

  • Preferred Lenders Program:. A PLP bank reviews and approves its loans without SBA intervention. The SBA doesn’t need to approve these loans, meaning you’ll only have to go through the bank (instead of the bank and a random SBA reviewer.) This makes for a faster process.
  • Certified Lenders Program: CLP banks are best for complex initiatives or deals that the bank doesn’t want to accept full liability for because of some obscure issue or request. CLP banks will have to pass off the loan to the SBA for the final decision to receive the government guarantee, so it could take a bit longer to get approved than with PLP banks.

The CLP process can be advantageous for really esoteric deals, but otherwise it’s best to use a PLP lender for speed and ease of communication.

3. Expect to provide a personal guarantee.

If you are going to hold 20% or more of the company’s equity, the SBA requires a personal guarantee. If you default on the loan, your personal assets are on the line. Because of this risk, most SBA loans are refinanced within three to four years. You usually only have prepayment penalties of no more than 3% for the first three years of the loan, so refinancing at four years carries no additional fees. And don’t try to be clever here — ten people each holding 10% equity doesn’t mean you’ve sneaked past this. Someone always has to guarantee the loan.

4. Experience matters.

The bank and the SBA will take your management team’s experience as well as the business’ experience in the industry into account when evaluating your loan. A lack of direct experience in the industry doesn’t mean you won’t qualify for a loan, but it will likely require you to explain more about your qualifications.

It’s also key that you have an attorney some experience in SBA loans on your side, if possible. That said, your loan officer will be the biggest determinant of success (See Tip #1).

5. Be prepared.

Remember: Banks want to see concrete plans for the deal you want to do. Don’t expect them to help you craft the deal structure from thin air. Go to them when you have a good idea of your proposed deal structure and then ask them to respond. Have the following:

  1. Letter of Intent
  2. Three years of tax returns and financials (plus any year to date information)
  3. Your personal financial statement
  4. A chart of your desired financing sources and uses

Getting an SBA loan for a business acquisition is far from impossible- it just requires some front-end homework. Thankfully, there are a lot of teachers around you. Seek out SBA lenders at banks you trust, or find a friend that has secured SBA financing, or research advisors who have experience putting SBA deals together. Bring these tips to conversations with those experts and you’re well on your way.  


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsFor more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Megabite Restaurant Brokers can help you buy, sell or value a restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.

Prospective Small Business Purchaser Testimonial – CALL OR EMAIL NOW !

Megabite Restaurant Brokers, LLC are grateful for the opportunity to confidentially and discreetly help you buy, value or sell a business.  We have an extensive network of restaurant, bar or nightclub business buyers looking for established, profitable businesses.  This is a testimonial just received  from a prospective purchaser.  

We have 100’s of testimonials from business buyers and sellers.  Many of these buyers provided testimonials after successfully purchasing a business in which we represented the SELLER of the business.  These buyers are willing to confidentially and discreetly share their experience with you.  Please contact us should you wish to speak with them.


“Just a quick note to say thanks for taking the time on MON night to discuss business ownership and the acquisition process.  Both your insight and your candor are greatly appreciated.  I can see why Mark Crumblish spoke so highly of you and your expertise.  As you recommended, I will remain patient and look forward to hearing from you when an opportunity may present itself.”

Name Available by Request, Prospective Purchaser


Megabite Restaurant Brokers helps you value, sell, broker or buy restaurants, bars, nightclubs - restaurant valuations - restaurant appraisalsFor more information, contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

Megabite Restaurant Brokers can help you buy, sell or value a restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.

Why Banks Ask for a Personal Guarantee Before a Loan

Why Banks Ask for a Personal Guarantee Before a Loan

It’s a common scenario: You have a thriving business, and it’s doing so well that you believe it’s time to expand. That expansion requires more money, and, of course, increases your risk of failure. But you have studied your options, talked with advisors, and everyone agrees it’s a smart and potentially lucrative move.

Your bank has been there with you from the start. They know you, your integrity, and the way you run your business. So when your bank requests a personal guarantee to borrow money for your business, it can be upsetting. Why do they need a personal guarantee on this loan? Is it a reflection of the bank’s assessment of my business or my plans? Does it mean the bank doesn’t think my business is worth the risk?

The quick answer to all of those questions is no. It’s common for banks to request a personal guarantee before making small business loans. It’s reassurance that you, the business owner, are willing to assume more risk to assure your business’ success.

It’s Not Personal

Personal guarantees on loans to small businesses (i.e., businesses with valuation of up to $25 million), while typically required, became the norm as states enacted legislation introducing new corporate structure options such as the limited liability company or LLC. Unlike a sole proprietorship or general partnership structure, the LLC shields owners and investors from personal financial responsibility for the business’ debt.

The advent and popularity of the LLC among small business owners prompted bankers to definitely require personal guarantees from owners.

“It’s understandable that you want to limit your liability, but we have to ensure the owner stays very involved and engaged. He or she is the key figure, and the most valuable asset of the business, and as the bank, we want to keep the owner motivated and involved,” says BBVA Compass Director of Credit Risk – Small Business David Peacock.

At most small businesses, the owner is the CEO, the face, and the visionary of the business. The owner knows the customers and vendors, the employees and community, and the opportunities and risks.

If a small business defaults on a bank loan, it’s difficult to find another CEO with the needed specific skill set that the bank can hire to keep the business going, says Tommy Crawford, Director of Business Loan Underwriting at BBVA Compass.

“The CEO is absolutely the key to the success of the business, and a personal guarantee increases my confidence in the CEO and in the company,” Crawford says.

SBA Loans Require Guarantees

Personal guarantees are required by some government-backed loans. For all SBA loans, personal guaranties are required from every owner of 20 percent or more of the business, as well as from other individuals who hold key management positions.

BBVA Compass typically requires an unlimited personal guarantee from an owner or CEO, which provides additional protection to the bank for collecting existing and future debts, says Credit Manager David Battles. In some cases, where ownership is dispersed among a number of different owners — such as a large law firm or medical group, for instance — the bank will consider and sometimes accept a limited guarantee shared by all business partners, says Battles.

“In most cases, customers understand why the bank requires a guarantee,” says Battles. “They understand it’s simply a part of doing business.”

This article was written by Sherri Goodman.  Birmingham-based Sherri Goodman was a print journalist for 15 years, writing and editing for daily newspapers in Alabama, New Mexico, Georgia, and Utah, and The Associated Press in Texas and Georgia. She also has worked in media relations and communications for companies in the banking, energy, and automotive sectors. 


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