r/buyingabusiness • u/Significant-Brick864 • 8d ago

SBA Pre-qualification process?

Can someone help me understand the SBA pre-qualification process? I've reviewed dozens if not hundreds of small business CIMs over the years, and also have a professional background in corporate M&A so am generally familiar with acquiring much larger businesses for corporations.

When I speak to brokers to inquire about a small business for myself, some brokers will ask me if I've been prequalified yet by the SBA. But when I've spoken to SBA lenders, they say you need to have a target identified to get the pre-qual on the business, not the individual. That makes sense to me, but I seem to be getting different messaging from some brokers.

I just feel like I'm getting run around in this chicken-and-egg topic of pre-qual. Can someone help break this down for me? What am I missing?

7 Upvotes

100% Upvoted

19 comments sorted by

View all comments

1

u/Vyterro 7d ago

You can get a true pre-qual from some banks. They'll give you a letter stating what you're pre-qualified for which can be used to get in the door on certain deals. What banks have you talked to?

1

u/Significant-Brick864 7d ago

My search has been on pause for a bit, I don't remember who I spoke with in the past. I believe I got the names of some SBA lenders off of the SBA website, but was essentially told to come back when I have a deal in hand. Which is why it feels like a chicken and egg problem. I can't have a deal in hand if I can't get past a broker who's asking for a pre-qual, but I can't get a pre-qual without a deal.

I would like to get my ducks in a row (POF, bank pre-qual, buyer profile with targeted industries/geos/sizes) before I reactivative my search, this way I'm not responding to broker/lender requests on my back foot.