Andy has been a plumber nearly a quarter century. He has spent most of that time working for and growing other peoples companies. This time around, he knew it would be different. He found a plumbing company he wanted to work for that solely focused on new construction. He struck a deal in early 2021 that he would come on board and build out a drain service department for the owners. In return, he wanted a salary and 10% of the revenue from that department. During this time the sellers revealed they were looking to retire, and wanted Andy to purchase the business. He had gotten by over his career, but hadn’t amassed any serious assets or liquidity and his credit was in the low 600’s. Not a lot of great options out there.
Andy met with an investor that was willing to put up half the purchase price as a down payment, and the seller would finance the rest. Things were moving along great, until they weren’t. The investor got cold feet just before they were ready to close, and Andy was back to square one.
He reached out to sbaloansHQ in late February of 2022 and asked if I could help him get him a loan for the down payment the seller wanted. Between traditional savings and his newly earned bonuses, he had just over 5% of the purchase price to his name. I pitched a different idea and said we could get the sellers 85% of what they wanted at closing (instead of half) if he was willing to set up some of his financing on specific terms. Andy was all in, but wasn’t sure he could pitch the idea to the sellers. I needed to get on a call with them and explain how this would work. Two days later, we had a buyer and seller in agreement, and we were off to the races.
Andy is a laid back eyes on the prize kind of guy, and he happens to share the name of one of my favorite movie characters, Andy Dufresne. He also happened to have a felony on his record from several years back that required an extra step in the process to get clearance.
So we have a guy with just enough cash for the bare minimum SBA requirement, a credit score that was nothing to brag about, and a felony on his record. BUT we also had a guy who was clearly good at what he does and willing to put in the work. We also had a strong business with a long history that Andy just increased sales by more than 30% for.
We pitched the loan to one of our lenders, and we were able to get them on board based on the experience and cash flow. We had to wait on the SBA felony clearance, nail down licensing transfer requirements for the state, and deal with some life insurance adjustments throughout the process. Overall, the deal was relatively smooth and we were able to get the loan closed in just 75 days from the initial proposal.
Andy can now keep building the company and start stacking up some serious net worth for himself instead of everyone else. Call me when you’re ready to head down to Zihuatanejo.
