Introduction
When you apply for business acquisition financing, lenders and private equity groups don’t just glance at your credit score. They perform a detailed evaluation of the deal. Knowing how they think gives buyers a huge advantage in securing approval.
At Yaw Capital, we help package acquisition deals so they check the right boxes for lenders and investors. Here’s what matters most.
Deal Size and Structure
- SBA loans: Generally up to $5M, with lender scrutiny on industry and buyer experience.
- Banks/Private Equity: Focused on deals $5M–$250M+, evaluating both capital stack and repayment.
Cash Flow and Debt Service Coverage
Lenders want assurance the business generates enough cash to cover loan payments. A Debt Service Coverage Ratio (DSCR) of 1.25+ is often required.
Buyer’s Experience
Private equity and lenders ask: Can this buyer run the business successfully? Relevant industry knowledge and leadership experience are strong positives.
Collateral and Equity Injection
- Buyers typically need 10–25% equity down.
- Collateral strengthens the application but is not always required (especially with SBA loans).
Market Conditions and Industry Risks
Some industries attract lender enthusiasm (tech, healthcare), while others require stronger justification.
Conclusion
Understanding how lenders and private equity groups think allows you to approach financing strategically. At Yaw Capital, we don’t just connect you with lenders — we help position your acquisition for approval.
