You need capital to grow and you are not ready to sell
Growth capital comes from four places: operating cash flow, debt, an equity partner, or selling part of the company. Debt is cheapest when the earnings cover it and the collateral supports it. Equity costs more but does not have to be repaid on a schedule. The right answer depends on how predictable the growth is.
Written and reviewed by Antoine Campbell. Last reviewed .
The mistake is funding a long-term asset with short-term money. A five-year piece of equipment financed on a line of credit creates a cash problem the growth was supposed to solve.
Match the money to the use
The SBA 504 program is designed for owner-occupied commercial real estate and major fixed assets; the SBA 7(a) program covers broader working capital and acquisition uses. Terms and eligibility come from the SBA and the participating lender.
| What you are funding | Usually best funded by |
|---|---|
| Trucks, machines, long-lived equipment | Equipment finance or a term loan matched to the asset life |
| Receivables and inventory swings | A revolving line of credit |
| Buying the building you rent | Commercial mortgage; SBA 504 exists for owner-occupied property |
| Acquiring a competitor | Acquisition debt plus a seller note |
| Hiring ahead of demand | Operating cash flow or equity, not debt |
| Rebuilding after a hard stretch | Equity, because debt service makes the hole deeper |
What a lender will want
- Three years of tax returns and current interim financials
- A debt schedule and evidence you have serviced debt before
- Collateral, and usually a personal guarantee
- Coverage: earnings comfortably above the new payment
- A specific use of funds, not a general request
When a partial sale beats a loan
If the growth requires capital the business cannot cover with debt service, or if you are already leveraged, an equity partner is the honest answer. You give up a share of the future to remove a constraint on the present. Selling control while keeping a meaningful stake is a version of this that also removes the personal guarantee burden.
Where Maurant fits
We are a buyer, not a lender, so we will not quote you a loan. Where we fit is a partial sale that capitalizes the business and leaves you with equity and a defined role. If a straightforward bank loan is the better answer for you, we will say so.
What Maurant needs to evaluate this
- What the capital is for, specifically, and what it returns
- Three years of tax returns and trailing twelve month earnings
- Existing debt, covenants and guarantees
- Whether you own the property you operate from
- How much ownership you are willing to trade
When Maurant is not the right buyer
- Owners looking for a loan or a line of credit; we do not lend
- Speculative expansion with no operating history behind the assumption
- Businesses that need capital to cover ongoing losses
Questions owners ask
- Does Maurant provide financing?
- No. We operate strictly as a principal buyer, never as a lender, broker, agent or finder.
- Can I sell part now and the rest later?
- Yes. A partial sale with defined terms for the remaining interest is a normal structure.
- Will taking a partner mean losing control of daily operations?
- It depends on what you negotiate. Governance rights and operating authority are separate and should be documented separately.
Sources
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