Episode 222: Navigating the SBA Loan Landscape with Bruce Marks
Bruce Marks, an expert in mergers and acquisitions lending, is a well-respected figure in the industry with over 35 years of experience in SBA lending. He specializes in deals with enterprise values between $3 - $8 million, and also has closed over 1,200 SBA deals as of the airing of this episode. Based at First Bank of the Lake, a community bank in Osage Beach, Missouri, Bruce has made his mark as a National LPL Lender. Over the last 9 years, he has provided over $325 million in SBA 7(a) loans to middle-market M&A deals.
Through his years of experience, Bruce has a wealth of knowledge and expertise in financing M&A transactions, making him an ideal resource for those looking to acquire a business. His background in both small business consulting and investment management has given him a well-rounded perspective on the needs and challenges of businesses seeking financing.
LENDER PARTICIPATION LOANS & THE SBA
As a refresher, and for those who may not know, LPL lender stands for "Lender Participation Loan" lender. It refers to a lender that participates in a loan provided by the Small Business Administration (SBA) to support small business growth and expansion.
The Small Business Association (SBA) provides a guarantee on a portion of the loan, reducing the risk for the lender, and enabling small businesses to access financing they may not otherwise be able to obtain through traditional lending channels. LPL lenders are authorized to make and service SBA-guaranteed loans, and they play an important role in supporting small businesses and promoting economic development.
The Small Business Administration (SBA) is a government agency that provides support and assistance to small businesses in the United States. The SBA offers various programs, including loan guarantees and working capital, to help small businesses grow and succeed. Despite criticisms and differing political views, the SBA is widely recognized as a successful program that has launched many entrepreneurial journeys and funded numerous businesses over the past 70 years.
THE SBA & UNIQUE OPPORTUNITIES
The SBA caters to many different financing needs of small businesses. Bruce and I agree that the SBA is a great organization that provides opportunities for small businesses that otherwise would not exist. It is the entrepreneurial spirit and passion of small business owners that make the SBA such a success.
While Bruce deals specifically in 7(a) loans, the SBA has many other programs for small businesses, including but not limited to:
- SBA 504 Loan program
- USDA Program
- Small Advantage Capital Program
- Working Capital Express
The most unique aspect of the SBA is its access to a range of resources for small business owners, such as business development centers in major universities, and SCORE (Senior co-Councils of Retired Executives), which provides mentorship, business plan building, and support in various aspects of running a business.
LENDING & HOW THE SBA WORKS
When it comes to lending specifically, the SBA operates through a network of banks with different lending policies, and the approval process depends on the level of certification that the bank holds with the SBA. There are three levels of certification through the SBA:
- Preferred Lender Program (PLP)
- Certified Lender Program (CLP)
- General Processing (GP)
It’s crucial, however, to understand that SBA loans are not a one-size-fits-all solution, and each bank may have specific lending preferences; therefore, it’s wise to find the right institution that caters to your financing needs.
As a specialist in SBA lending, Bruce emphasizes the importance of being a specialist in one area, choosing to be the best in that area, rather than a jack of all trades and trying to be everything to everyone.
THE THREE Gs OF A GOOD DEAL
Investing in a business is a big decision, one that requires careful consideration of numerous factors. While it's important to understand the financials, the product or service offered, and the market trends, one of the most crucial elements to consider is the people involved.
Bruce operates in lending a little differently compared to traditional banks. He is not interested in the last three years’ numbers, but rather the people behind the business. He refers to this as The Three Gs of a Good Deal:
- [lending to a] Good Person
- [who is buying a] Good business
- [and has] Good cash flow
If all of these boxes are ticked, Bruce is in. For instance, with tech startups, investors know that businesses will pivot multiple times before finding the model that will work. The business is not set in stone, and what’s important to Bruce is the people behind the idea, and the ability to execute it.
Deal-structuring is an important aspect of business acquisition and can impact the success of the transaction. It is important to consider factors such as de-risking the business, choosing the right investors, and being responsive to ensure the success of a deal
FOR MORE ON BRUCE MARKS:
Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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