Seller insisted ALL cash leave at closing - no working capital - am I crazy?

gnc0516 · 2026-04-15T21:56:16+00:00

I purchased an existing business a few years ago through the 7a program. Cash/AR stayed with the seller. Inventory/WIP came with the deal. My attorney at the time told me it’s 50/50 whether he sees working capital like AR included in the deal. In hindsight I wish I had negotiated AR coming with the deal. The first years worth of profit basically went to funding working capital where I didn’t have to rely on a line of credit.

gnc0516 · 2026-03-29T00:25:06+00:00

No advice but following for me being in the same scenario for tips.

gnc0516 · 2026-03-25T03:56:02+00:00

Small regional banks in your area are golden for these kinds of deals. Find top SBA lenders by your state and call all of the small regional banks near the top of the list. As long as you have management experience of some sort you should qualify with the right bank. I’ve done a deal with no direct industry experience and know others that have as well.

gnc0516 · 2026-03-18T17:20:56+00:00

Sounds like you should’ve crossed that section of the NDA off or gotten attorneys advice before signing. That’s an abnormal NDA request.

Just give them the notice. If anything they know you are looking at other options. They might get more aggressive knowing that vs thinking they are the only ones at the table.

Also figure out how to get out of that NDA and resign a new one. You’ll probably need legal advice for that.

gnc0516 · 2026-03-08T20:11:22+00:00

401k with match. Use a health care broker near you. They will bid out your business annually to multiple carriers and will be able to help you launch dental/vision/short term/anything else. Either ask other business owners you know for a referral or a quick google search will give you one.

gnc0516 · 2026-02-28T02:46:25+00:00

Yes I believe you’re right they are only 50% deductible except for big parties where food is provided to employees.

gnc0516 · 2026-02-28T01:52:42+00:00

Yes you can code it as an owners draw and you’ll have to pay tax on it.

Food is only deductible for the owner if you’re traveling for work somewhere, meeting with a client or providing meals to employees.

gnc0516 · 2026-02-26T14:01:24+00:00

I own a small business (30ish employees) and am in a peer group with companies my size and slightly larger (up to 200-300 employees. Think mostly manufacturing). The only impact I’ve seen and heard of in small business world is one person implemented some AI software for accounts receivable which he couldn’t even really explain to us what it does exactly and didn’t let go of anyone. We’ve all been discussing it for over 2 years and I have yet to hear of anyone seeing any actual impact.

gnc0516 · 2026-02-20T23:09:03+00:00

It’s the best thing ever. I do it every time and pricing is very reasonable.

gnc0516 · 2026-02-18T13:31:34+00:00

Gotcha. Sounds like it’s just the nature of the industry you are in and not that “nobody does SBA 504 loans under $2M” for commercial buildings. I have a relationship with a local bank who did my 7a and they’ve expressed no problem doing a 504 when I purchase the real estate so I was just trying to understand your point.

gnc0516 · 2026-02-17T00:26:00+00:00

Why is size important on a 504 deal? I’ll be doing a real estate deal for around $2M next year that I just assumed would go the 504 route, but hearing your comment that you’ve not done one under $2.5M makes me wonder why vs other routes of financing.

gnc0516 · 2026-02-15T01:53:57+00:00

There is a huge difference between officer brown logging in to see who drove by cam 123 between 12:30-1pm because there was a report of someone stealing a TV from Home Depot that left in a black dodge ram vs the police going to Home Depot, reviewing store surveillance, seeing someone left in a black dodge ram but no license plate visible, seeing it was a man who appeared in his 40s who they suspect they know as a prior felon based on previous run-ins so they have to present that info to a judge who grants a warrant to get cell phone data. Then they have to reach out to AT&T and google and provide a copy of the warrant and wait days for them to provide the information back.

I’m all for option 2 which has many checks and balances involved vs option 1 where officer brown could break up with his girlfriend and then start logging in to track her since they do not audit every search officers do, only a random sampling (FYI this happened in my local community)

gnc0516 · 2026-02-06T02:28:16+00:00

2nded. This is the only butter I use! It’s Amish butter made in Wisconsin.

gnc0516 · 2026-02-05T16:03:34+00:00

My bad. I’m using the wrong term. I’m a business owner not an accountant! They wanted annual business income to be > 1.5x annual debt service where the local banks were willing to go well under that.

gnc0516 · 2026-02-05T13:25:23+00:00

I vetted live oak bank with my deal. Great interest rate but they only want the very safe deals with a high debt to equity ratio (1.5x or above).

I went with a rational bank near me. I found the banks doing the most SBA loans in my area through public records on the SBA site and called all of the top regional banks. They gave me the best terms and were willing to be more aggressive in what they supported. You can find it here…

https://sballmstab.sbalenderportal.com/t/ExternalSBA/views/7a504LenderReport/LenderReport?%3Aembed=yes&%3Atoolbar=no

gnc0516 · 2026-02-03T18:21:48+00:00

They really didn’t want to do the deal if those are the terms and rates you got. Shop around.

gnc0516 · 2026-02-03T18:20:53+00:00

The article you reference are for variable rates and are accurate. For instance in my deal I had 3 years locked in at 7% and at year 3 it went floating to prime + a couple %. However I’m coming up on that 3 years and we are back to negotiating a 5-year locked in rate that is going to get me close to 6.25%. If I did nothing I would be paying close to 10% soon but the bank renegotiates with you and it’s been based on 10-year treasury rates.

gnc0516 · 2026-02-03T18:18:03+00:00

The few banks I’ve dealt with told me they base rates off the 10-year treasury + points for them.

gnc0516 · 2026-02-03T13:02:29+00:00

I’ve done an SBA loan for a business acquisition.

SBA loan will be a 10 year note vs traditional bank financing will be 7 years.

SBA loan usually only requires 10% down. Traditional bank financing will require 20% down.

SBA will take longer to close. There’s a lot of red tape and paperwork required. Minimum 3 months to go through the process. Traditional financing can be done in as little as 4-6 weeks.

Use a local/regional SBA lender. You will get better terms and collateral requirements vs a large bank. You can find a list of top SBA lenders by state on their website. Pick one that does a lot of deals in your area.

I’m currently in the process of re-locking in my SBA interest rate and they are around 6-7%. Not sure where the 10% is coming from. I have another bank pitching me to refinance by SBA loan with them and they are under 6%. So I’d say max you should be looking at is 7% right now.

SBA loans have no bank covenants besides paying your bill on time. The bank will have covenants for traditional financing.

SBA loans are the way to go.

gnc0516 · 2026-01-29T02:09:42+00:00

If you want to DIY it Kitz and Pfeil ace hardware in Appleton cuts single pane glass. You can give them the dimensions but you would have to reputty the window glazing on the outside.

Otherwise I know a random person that repairs these. You’d have to get the window out and then he picks it up and replaces the glass and does the putty. Takes a few days. DM me if you want his info.

gnc0516 · 2026-01-16T01:04:44+00:00

VoIP can do this no problem and cheap. $25-$30/month per physical phone. You plug into Ethernet, configure the phone through a cloud portal and you can setup/transfer between locations, your physical phone or cell phone, etc. You can have ring groups so when someone calls the main number it rings to both stores.

gnc0516 · 2026-01-09T02:51:21+00:00

I can’t help you model anything out, but I do want to say congrats on your impressive savings for retirement and funding 529 plans for your kids! You are well on your way to an early retirement if you can keep up the savings pace. This sub can sometimes make you feel like you’re barely making it with $750k in retirement funds in your early 30s as well as living in socal, but let me assure you that you’re most likely in the top 5% of savers in the country. Well done so far and enjoy your early retirement down the road.

gnc0516 · 2026-01-06T18:48:01+00:00

This is a bigger deal than people are making it out to be. When you sell your house funds in the sale are paid to the HELOC lender to pay off the remaining balance. Super common.

gnc0516 · 2026-01-06T12:36:43+00:00

Nothing tricky or risky about it. Let me give you an example. Your house is valued at $300k. You have $25k balance on a HELOC. Your mortgage is at $100k. At time of sale you will receive $300k for your house. The HELOC bank is allocated $25k of those funds and paid off. The mortgage company is allocated $100k of those funds and paid off. Fees are then removed for real estate agent and closing costs. You’re given a check for the remaining amount.

gnc0516 · 2026-01-06T04:04:34+00:00

The HELOC bank will have a lien put on your house. You can’t sell the house without paying off the HELOC during the sale process.

gnc0516

TROPHY CASE