Acquisitions Anonymous - #1 for business buying, selling and operating - How to save a dead deal? - Acquisitions Anonymous Episode 110

Episode Date: July 29, 2022

Bill D’Alessandro (@BillDA), Michael Girdley (@girdley), and Jake Wakely (@jakelywakely), who owns a moving business in Texas talk about his war story of acquiring a home services business in Vail, Colorado. Jake has an excellent rationale for choosing this business which is his getaway to spend more time in Vail. He also shares how he could figure things out as the deal was under LOI, an SBA bank, and financing fell apart two separate times within a week of closing.Subscribe to our channel!-----Thanks to our sponsors!CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth with a “client service first” approach. They offer a full suite of accounting services, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.-----Show Notes:(00:00) - Introduction(00:50) - Our sponsor is Cloudbookkeeping.com(02:48) - Let’s get to know Jake and his storage company.(03:52) - How did he find Vail Home Care? What does the company do?(08:01) - In what way was the business viable when it wasn’t that huge financially?(14:58) - How was the financing of the Deal structured initially?(16:00) - What happened in the Due Diligence process?(23:32) - How did you go around in such a short time?(27:55) - What have you learned? What would you have done differently?(34:23) - When is SBA a good route?-----Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.Do you enjoy our content? Rate our show!Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.-----Additional episodes you might enjoy:#108 A fireworks store and a ski rental business for sale#106 A Pet Product and Saas business for sale - Which one do we like?#105 How to Make Money in the E-Commerce Game - Bill D’Alessandro gives an e-Commerce masterclass - Part 1#79 What do Investors want? - Dig into an investor’s mind with Bradford Hardin#75 SBA Loan Secrets with Heather EndreSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Hey, everyone. Welcome back to another episode of Acquisitions Anonymous. I'm one of your host, Bill Dallessandro. And today, we have a really great war stories episode for you. Our guest is Jake Wakely. Jake owns a moving business in Texas and comes on to share his war story of acquiring a home services business in Vail, Colorado. I loved his rationale for choosing this business. It was basically because he wanted to spend more time in Vail, which I joke is, that's how entrepreneurs go on vacation, is find a way to make it a business trip. But Jake had this deal under LOI with a bank, with an SBA bank, and his financing fell apart two separate times within a week of closing while his wife was eight months pregnant. And so I'm excited to hear you guys or to let you guys hear how he figured all of that out on this week's episode of Acquisitions Anonymous. Hey, Michael here. I want to talk to you about today's sponsor for the episode, which is cloudbookkeeping.com. So cloud bookkeeping is actually run by my neighbor, Charlie. So I've met him in person and can attest that he's a real human being and a good person. And what cloud bookkeeping does is offer a full suite of bookkeeping services all in the cloud for you around QuickBooks and other technologies that you're using as a small business owner.

So if you're interested in getting the bookkeeping part of running a business off of your plate and focusing on running your business, Charlie and his team are one to call. They can put together a bunch of other stuff in terms of helping you manage and grow your business besides just bookkeeping, sophisticated reporting, definitely helping you get your QuickBooks online set up in the right way, and a number of things around payroll as well. So definitely know them and recommend them. If you want to find out more about Cloud Bookkeeping, you can go to their website at cloudbookkeeping.com, reach out to Charlie. I know many of you have and see if he can help you make running your business easier and more fun

by letting them help with a lot of the bookkeeping solutions. And when you call, mention this podcast, it would help us and help Charlie know that we're supporting him as well. So thanks a bunch and cloudbookkeeping.com as the sponsor for today's episode. All right. Today on Acquisitions Anonymous, we have a really interesting guest. Jake Wakely is here with us. Great to have you, Jake.

Pleasure to be here. Thanks for having me. All right. So Jake came to us. This is going to be one of our war stories episodes. And Jake came to us from Twitter and said, oh, boy, do I have a war story for you guys? So, Jake, I would love it if you would just kind of tell, give our listeners an intro, kind of who you are, what you do, where he came from, and how you got to the beginning of the story. Yeah.

So I'm Jake Wakely down in San Antonio, Texas. I made a, tried to make a funny when we were originally. scheduling this that I was just going to walk over to Gertley's house and knock on his door and show up for the episode. Turns out he's not in town. So can't do that, but live right around the corner from him. Got into the S&B world about a year ago when we bought our first company moving business down here in San Antonio. Since then, we've acquired a property management firm in Eagle County, so kind of Beaver Creek, Vale, Colorado area. That closed. closed six weeks ago. So kind of Memorial Day, June 1st was, was our legal day one. So that's our

most recent acquisition, which is where the war story comes from. We've got a couple from the first deal, but I think we'll focus on that one today. But yeah, it's kind of all centered around banking is hard in SMV. So, so veil home care, what does this company do? Yeah, so we are a property management firm in its truth's form for very, very, very wealthy clients. So there's no rentals, no vacation, no Airbnb. It is strictly taking care of second, third, fourth homes for high net worth individuals. So this would be things like, like, you know, cut my grass, make sure that the water gets turned off before the winter, all that stuff. Yeah, so annual contract, we do a weekly walkthrough.

We've got property managers out there that do a weekly inspection of the house, make sure doors are closed, make sure windows are still intact, make sure the roof is fine, make sure water runs, outlets work, and then whatever the clients are coming, we'll make sure their house is set up and prep, deliver their cars to the airports, make sure there's groceries in there. If there's any specifics they like, It's really kind of a concierge's tailored property management for them or for whatever they need. We even go into potentially project work, so they need a new roof.

They need a new deck. We'll oversee those projects for them. So yeah, a little bit different than the typical kind of property management that you hear of, you know, let's load up on doors and let's rent stuff out. none of the clients rent. It's strictly just making sure their house is in tip-top shape whenever they arrive. Okay. Wow, really interesting.

That sounds like a service I would really enjoy if I had a rental property in Vail. So did you, was this a business model you were interested in? Was this a place you were interested in and your business model agnostic? You know, how did you find this business? Location. I've been going out to Vail for about 10 years now. my old college roommate lived there right out of college. My wife and I love to ski.

So we've been going to Vail for about 10 years skiing, visiting them, talking about wanting to spend more time out there for about 10 years from setting foot. So I was searching for a while for either a place to buy out there or a business to buy out there, figured if I've got to do it, might as well get something that's going to generate income versus cost me a lot of money. So scouring, scouring biz by sell for, for years. And back in December, early January, I came across this deal, had notifications for kind of Eagle County area. Came across it, you know, property management seemed not the most difficult of businesses

out there. Obviously, every business is difficult. however kind of intrigued me so I looked through the look through the deal a little bit sign the NBA sent it over to our team and we're like this actually kind of looks kind of cool so but yeah definitely more location versus business model industry anything like that but it kind of fit our parameters of service business not necessarily recession proof but the clientele seemed like it's a little bit more than your typical, you know, vacation rental, you know, ups and downs. This type of clientele is not affected as much. And so we, we liked a lot of the parameters

around it. But definitely location base was was a big key to it. It's somewhere that we spend time. We want to spend more time and want to have something out there. This is how entrepreneurs go on vacation, right? Oh, geez, I really like spending time in a while. I need to buy a business there. So it's interesting to me that you've found this. Like everybody talks about these like, oh, there's all these hacks to find deals and stuff like that. And you just did it straight old school. Like you had a biz, a bis buy sell notification set up for Eagle County.

And it showed up in your inbox and you looked at the deal. So, you know, it's super curious. Because a lot of times people are talking about actually being able to find deals just through the front door. And you totally did it. Yeah. I mean, obviously there's a lot. on biz by sell that you know everybody kind of knows that it out there it's it's tough because there's

it's a different culture and a lot of it is word of mouth and very there's very few listings out there so I was surprised that this came about and even more surprised that it was viable to be completely honest after look at the financials I was like oh that's not a huge business but a solid one But yeah, didn't need anything creative, didn't need any, you know, off market this, off market that. It just just stayed patient and kept looking and looking and looking and figured something would pop up when the time was right. So you sign the NDA, you get all the financials, you look at it, you think it's actually pretty decent, kind of fits your qualitative and quantitative parameters. Then kind of what happens next?

Yeah, so we sign the NDA, send it over to my team. So I've got a partner here. At budget, we're partners in all this kind of building. I'm sure you've heard John Wilson's podcast for kind of building our little portfolio service businesses. Sent it to him. He was like, yeah, it looks good. My old college roommate and his wife live out there.

She was looking for a change. He's a high-end realtor in Eagle County. So the clientele we're looking for on this, send it to him. His wife is actually our GM now. out there for the company and he is a partner in the business. So sent it to him and said, hey, are you interested? What do you think? Had a few calls, set up some time with the broker, got a little bit more detail,

and then set up some time with the sellers just to have that intro call. Make sure everything mesh well. Make sure we weren't missing anything. Every, you know, kind of stars aligned. Everything kept checking out seemed like a great deal. I believe the sellers ended up with probably half a dozen at least LOIs. We submitted an LOI, kind of went through that process, had another call with them, and ultimately they felt that our team, I think they felt that we had a team and it wasn't just a person.

We had that local presence, husband and wife. It was a husband and wife combo that owned it. So they really loved we had a husband and wife combo that, were local to the area to kind of take over their legacy. But also, there's just a lot, as we all know, in small business on the back end. So we have a team here that's running a lot of the back end operations for the deals. So they love that combo, accepted it. Everything went well. And we signed the LOI and press forward into due diligence. Hey, Jake, if I interrupt you real fast, just to give us a little context, can you give us some numbers

about the business? Like how many years has it been in business? What's kind of the top line revenue, profit margin, stuff like that? Just so people can kind of understand the size and magnitude of what we're dealing with here. Yeah, so 20-year-old business. I want to say it was founded in like 2001-ish. Last year, last year they did low 800s in revenue, low to mid-800s, profit margin, I want to say net income was around 200 or so.

So not too bad. And that doesn't include owner's compensation. So the husband and wife each took compensation out of that as well. The wife works part-time bookkeeper for the most part. So add in seller's earnings. It was closer to kind of that 350-ish range on 800. So pretty solid. And we knew a lot of us would just kind of fill in actually for less than what they were taking.

It had, it went through a separation in 2019. So their revenue was over a million for a few years, kind of 2016, 17, 18. 2019, the two founders separated. Current guy that we bought it from revenue dropped down to about 700. and he's slowly built it up. But he's capped it off over the years, and he kept it flat because he knew he didn't have the capacity to take on more homes. And then what were they, so it sounds like the business does $250,300.

What were they, did they have an asking price when they listed the thing? Yeah, they asked 1.2. We came back in a little bit lower than that. But they ended up asking 1.2. So what, four times kind of seller discretionary if you go off that. We ended up working out a little bit lower, added some seller finance in there, added some stuff, kind of some earn out clauses based on retention. So then how was that?

Okay, so then let's, you find out you like the deal, you've done the due diligence, you have the LOI signed with them, and you have a price. How are you structuring the deal? Like how are you putting it together in terms of equity, debt, seller financing, all that kind of stuff? Yeah. So initially we went the SBA route. The deal on the typical biz buy a sell listing, it's SBA approved.

There was a lender on there. Figured he had looked over some of the financials. Went down that route, started SBA. We had 10% equity, 10% seller finance and 80% SBA. So a little bit more than what the SBA requires, but we were fine with that. We kind of knew we wanted to get a little bit more in there. So went down that route. Everything was great.

Had talked with the lender, walk through the typical SBA route, get them the 4,000 pieces of paper that they need, all the documentation. We had actually started talking with the lender before we signed the LOI, before all of that, we contacted the lender and started that process when we started having conversations with the sellers.

So we were kind of prepared, started getting in pre-documentation. We're like, look, we don't want to wait around on this thing. If we get a signed LOI, we want to press forward as quick as we can. And then just in terms of who the buyer is, you know, there's you and your wife, you know, you have stuff, then you have a partner. So how's all this getting structured? Are you guys doing this deal separately? Who's actually buying this thing?

Is it just you? Is it just the folks up in there were a bunch of different cast characters? So how's it all actually set up? Who's doing the acquisition? Me and my partner, our wives are, I guess, not technically on, but Texas is a community property state. So they're on there for SBA purposes for the guarantees. But it was me and my partner. And then out in Colorado, husband and wife had a small percentage.

They were partners up there. my partner and I here, and that we had one other small equity backer to put some money in, but they were a small percentage for the down payment. Okay, so Jake, you've got an L-O-I in place. You've got an 80% SBA loan lined up. Tell us a little bit about the lender and the financing. Sounds like you told us it was pre-approved. It should be good to go, right?

Yeah. Our understanding was everything was pre-approved. no hiccups, no headaches, no concerns through due diligence until we got to the end of due diligence, which is when things kind of got squirrely. The banks stopped really giving us some updates and then decided that they no longer like the deal. Not that it was us, not that it was personal guarantees, not that it was anything other than underwriting decided they no longer wanted to do the deal. And we're talking 60-ish days into this

whole process talking with the bank, going through SBA, no indications otherwise. That is terrible. This drives with several other SBA small business lending experiences I have had where the guy up front is the salesman, basically, like he wants to make a loan. But he can't approve any loans. And the man behind the curtain, the underwriting guys approve your loans. And of course, we know nobody in life does any work until right before the deadline. So it creates this terrible thing where the underwriters don't look at it until you're like ready to close. And then all the shit comes out. And it sounds like that's what happened to you here.

Yeah. And he, you know, he harped on, because we had had a bad SBA experience in the past. And so he harped on, you know, I've done this for 25 years. We're good. It's a major SBA lender. Everybody would know the bank. I'm not going to say it. I'll be courteous.

but, you know, it's, it was a pretty bad situation. I mean, like I said, we're talking 60 plus days into talking with the bank. No red flags, no indication, no concerns whatsoever. And we get through due diligence completely. And four days after due diligence, they pulled the rug out from under us. And it was like, sorry, we're no longer interested. We're not doing the deal. Nothing can change this.

And we knew all along, you know, asset like business, like basically no assets. It's all contract revenue. We knew that. They knew that. But for some reason, they decided they no longer wanted the deal. Okay. So now you've got an 80% hole in your deal structure.

Your bank is out. What do you do? Start calling around. Start sourcing. Start going through our network. We've got a local bank here. I say local. It's a huge, huge bank in Texas.

and Gurley would know exactly who it is. They've got massive buildings downtown. But my whole family works there, Frost Bank. My whole family works there. Our bankers there. So we called them that are y'all interested. They said probably not on this deal. They're a very, very conservative bank.

So the whole no-having assets, they didn't like it. Called around to a few others, networked with. The broker had a couple recommendations. we got some recommendations. But yeah, just lined up more banks to talk to and kind of go down that path again. So did you end up finding one?

Did you find a bank to come in and take the 80% slug? Yeah, we converted no more SBA, tried to go conventional route, raising the equity wasn't a concern. We had some other backers that said they would come in and were interested.

So went more conventional, said, hey, this is probably quicker. well, I know it's quicker and we can just raise it. We'll just have to restructure the deal a little bit. So we went down that road, found a bank that said absolutely we could do it. Mind you, we're getting fairly close to crunch time. We had like a May 30 first deadline and we're talking this is middle to end of April when we were talking to these people.

So all of a sudden we had a very quick time frame. But they said, yes, we're good. Here's all the documentation. Let's do it. Everything looks fine. We have no reason to believe we're not going to get this deal done. We just said, let us know what loan value you want us to come in on, what equity we need to raise. Just let us know we'll get it done.

Yeah. So you went from an 80% loan to these new guys. It's not going to be SBA. It's going to be conventional. And what was their loan to value? How much of the deal were they going to finance? They said 80. They said they'd come in at 80.

So obviously 10% seller finance, 10% us. we said, you know what, let's come in a little bit more. So we raised it up a little bit. We were going to do 70, raise 20% equity, 10% seller finance note, and then do 70 at the bank. And they said, yeah, absolutely, that's fine. I have no reason to believe that's not going to happen. Okay. So we proceeded down that route.

So that you went from an 80% loan to a 70% loan and you doubled your equity commitment from 10 to 20%. So I assume that you and all your other backers had to double the choice. check size that they were going to put in in order to make this deal work, then what happened? We got to about 10 days out. Mind you, no real updates throughout the process, but every time we talk to the bankers, we're good, we're good, we're good, kept following up. They came back a couple of times saying we want more personal guarantees.

Okay. So we went to our, we went to a couple backers and said, that's fine. Then it became, oh, well, we know who one of your backer is. So now we're going to reach out to them directly and require a million dollars in deposits in order to do this deal. And we were like, wait, what went around our backs to them and said, we want your personal deposits in order to do this deal. So just to be clear, this bank wanted your lead high net worth backer to leave a million dollars on deposit with them to secure the loan or just they wanted a million dollars of business. Quid pro quo, if you do this, we will do the loan. Not to secure the loan separate, but they wanted the banking relationship with the high net worth person in order for us to do this other deal. They said, if you do this, we'll do this. And along the way, there's personal guarantees involved in all of this, right? You guys are pledging. You're pledging to make sure these loans get paid. Yeah, mind you, at this point, me, my partner, the husband and wife combo out there, and the high net worth individual have all pledged personal guarantees. There are five personal guarantees. Yes. And at that point, they come back and say, never mind, we also want the million dollars in deposits.

And I'm assuming you're going to tell me that was a bridge too far. Oh, yeah. Our high net worth basically told him to shove it. He was not so nice on the phone with him. We were not so nice. This all came to head. So we were supposed to fly out to Beaver Creek area on Sunday Memorial Day weekend. This all happened the Tuesday or Wednesday before.

I think Wednesday before is when this all happened and everything just fell apart. So this is the week. week of closing. This is like Monday, Tuesday, you're supposed to fly out there to close like the following Monday, June 1st. And all of a sudden, you have 30% of your finances committed. You have the 10% seller financing, you have 20% equity and now no bank at all. So you got a 70% hole in your deal with days to go. How do you plug that? Aggressive phone calls for the next 12 hours. We went back to some of our backers, explained the situation and we just put our heads together. Luckily, they were confident in us and confident in the deal.

So within about a maybe 12-hour stretch, we raised the rest of the commitment from them. We structured it partly. The 70% is mostly, is all a bridge loan. So with the understanding that we are going to refinance them out of that within a year timeframe, but we did a bridge loan, fixed interest rate. We also raised their equity a little bit more. So to kind of compensate that extra piece. But yeah, we ended up private financing the entire thing within about a 12 to 24 hour stretch.

And we had all of the money secured and wired into. our bank by Friday. So this was, you have sort of two pieces, or several slugs here. You've got the seller financing. You've got the, I guess what would be called like the GP commit, your commit. And then you've got all of your investors equity commit. And now is the same equity guys that are going to put in the debt commitment, you know, kind of roughly the same ratio. Same people, no new parties. Same people. No new parties. Wow, that's fantastic. So now you've got no bank, but you've got still probably 60 to 65% leverage on the deal, which you'll have to refinance out at some point. Do you have a, you know, kind of a bullet or it doesn't mature or like,

are you under the gun to finance it or is just sort of a, you know, we'll do the best we can. So we've got a year to finance it, to refinance them out of their bridge loan. If we don't, it all converts to Series B shares, which most of them are at already. So non-voting. So basically, if we don't, their equity increases, but we are, we're fully committed to refinancing it out, and we've already started that process. So that it would be phenomenally dilutive if you don't refinance. Yeah, but you got it done. But you got, I mean, the point thing is you own the company now.

Yes, yes. The short of it is we own the company, not, you know, not for lack of hurdles. Yeah. Wow, that's incredible. So how, so tell me about a little bit about the relationship with your backers. I imagine that, you know, even if relationships are good, this is a lot of tops and curvy, people can get quite frustrated, et cetera. You know, how did you make sure or did you have any problems with people going like, hey, maybe we shouldn't do this? Like, good try, Jake, but it's not going to work this time.

Did you have any of that or was everybody all in the whole time? A couple of them were all in the whole time. We had one or two that were hesitant. Obviously, the deal structure changed multiple times. Um, every time we, every time it changed, equity got diluted a little bit. Uh, but yeah, we, we ran into some, some hiccups here, there, some hesitations. Um, but ultimately people said, we believe this is a good business. Essentially, oh, great, we get to own more of it.

Uh, we trust Jake is back is running it. So we'd rather own more of it and get the deal done. Was that basically the upshot? Yeah. Yeah. Yeah. A lot of it was trust on us, um, own a little bit more of it. if for some reason it doesn't happen on the refinance.

But ultimately, we had to, we had to make it favorable for them as well. So the interest rate is obviously a little bit higher on the bridge loan and some of their money just to make sure it's favorable for them to come in. You know, it's, it can't not be. So we were able to structure that accordingly and still leave us room to grow the business and room to operate. But yeah, a lot of it was just trust, trust in us. So what would you do?

obviously you've now been, you got spurned by two banks at the last minute in sequence on the same deal. What did you learn? Like you're probably going to, you're probably going to consider an SBA loan again or maybe not, or you're probably going to consider bank financing at least again or maybe not. You know, what would you do differently, if anything, on your end to keep this from happening to you again next time? Ask more questions up front, probably of the banks. Just obviously we try to to ask a lot. But understanding every deal, I'm understanding more and more about how the banks view things. And so deal structure, deal assets versus, you know, contract revenue, those kind of things. I kind of understand where a bank's coming from. For me, I'd love to not have to go the bank

route moving forward if I didn't have to. It's just, you know, if I'm able to do it and pay a little bit more to have the private investors. I personally, I like that route. I'd rather our investors win and get better returns than pay a bank for it. I don't think that's always going to happen, but I personally kind of like that, that win-win situation for our investors. And these are, some of them were also in our first deal last year. So these are people that have been with us for about a year now and trusted us enough to go into the second deal as well. So we're kind of building that investor base for us. If for other people listening that I'm sure are doing deals with SBA loans or with banks

and can't avoid banks and are going to use bank leverage, is there anything you would recommend that they do to avoid ending up in the situation that you end up in when working with the bank? Start building the relationships with bankers. Our current banker here in San Antonio, he's fantastic. He's a straight shooter. He doesn't beat around the bush. He's one of the ones.

that said, hey, I don't think this is right for our bank. We're going to pass. I'd much rather have that immediately all day long from the banker versus going down the rabbit hole of collecting it. Oh, well, maybe let's see if we can push it through underwriting. So building the relationships with the bankers is huge, absolutely huge. And how about interacting with underwriting? Because, yes, everybody would prefer a quick no rather than a slow no, especially if you're

trying to get a deal done. but it seems like you got blindsided a little bit in that things got so close to closing and either people hadn't done their homework or they hadn't gotten internal approvals or something happened. Do you feel like there was any way you could have avoided it? Potentially, I think asking for a little bit more information from the bankers up front, how they're underwriting views deals. Because like ours, we knew there was no asset. So, hey, is your bank more conservative?

do they do asset like deals commonly? How do they do these? Asking those questions, getting a little bit more clarity, I think would have certainly helped. So just again, probably goes back to the relationship with the banker and understanding how the bank views deals. Yep. I was part of an SBA deal almost two years ago now.

And it was the exact same thing. We had a whole bunch of small equity commits. and probably a week before the deal was supposed to close. And by the way, the deal was supposed to close on 1231 because the seller wanted it in that tax year. So it was a delay the seller said, I'm not selling. So it was closing this date or don't own it. And the bank came back like on Christmas and basically said, we don't like it. It's too complicated.

It looks like a private equity deal to us worth all these small commits. We can't approve it. We need personal guarantees from every single small equity commit, even people who were in for like 1% of the deal, which was just a total non-starter. And what I basically found out was that the people who needed to look at it had not looked at it until then. The bank internally, you know, it was mostly the sales guy and mostly the rubber stamp people. And they basically, to use more sophisticated financial terminology, they had not taken it to investment committee, really. until one week before closing. And then they took it to investment committee

and some high up people, the bank, had heartburn about it. The way it ended was I ended up with our lawyer on the phone citing SBA rags to them, that it was teaching them about the SBA rags to show that it was fine. And we did end up closing the deal. But it was a nightmare because the people that needed to look at it had not.

That was the big lesson for me. I say, I need the names of the human beings that have to sign off on this and have they signed off on it? And have they seen it? Have they done the work? That was a big takeaway for me. Yeah, for SBA especially,

it's probably asking those bankers and asking the bank, how much SBA do you do? Like, what, if you're going that route, how often do you do SBA? Hey, banker, how often have you done SBA? You know, because even if the bank does a lot, if that banker doesn't do a whole lot of SBA, you're going back and forth and back and forth and back and forth.

You may, it's hard to get straight answers out of it. Like you said, it may sit with the banker for a long time. So understanding how much they do in that space will certainly help because they can do SBA, but that doesn't mean a whole lot if they don't know all the nuances around SBA and things get flagged and held up all the time. Yeah, yeah, I would never do an SBA deal with a bank that wasn't closing a couple a week. I mean, you want somebody who knows what the heck they're doing because SBA is a pan in the butt. from the bank side. They have to file so much paperwork.

Yeah, the difference between the guy that tells you can make you the loan and your point of contact and the underwriters behind the curtain is night and day because your appointed contract is a sales guy and he gets paid for closing loans. So he gets paid to tell you, yeah, we'll try to cram it through underwriting, et cetera. But the underwriters get paid if their loans don't default. So they essentially get paid for not making loans, for not making loans that are at all risky. So you're this total misalignment of compensation structure and sales guy is the only one you're talking to, whereas underwriter guys are the guys that have to stamp your deal. And if they don't

look at it until the end, you're in trouble. Deals. Yeah. And on ours, I mean, the guy kept telling us, I've done this for 24 years. I've done SBA. You know, this is all I do is SBA. So we're thinking, cool, that's great. Now, it wasn't a guy that we had talked to before. He was, on the deal, you know, kind of on the SIM. And so we're like, okay, you've seen the deal, you know the numbers, you know the structure, let's go through you. Conversely, last year when we were closing budget went down the SBA route as well, took forever. It was an issue of lack of SBA knowledge. So we SBA bank or SBA approved bank, but the banker hadn't done a whole lot.

So it was just back and forth and back and forth and back and forth had no idea what she was doing, ran into similar situations and we ended up bailing on the SBA process five weeks before closing and going conventional and pulling, you know, pulling more equity in. Same deal. Repeated again. So, but that was our first go around. We learned some stuff from there. But, yeah, it could be a nightmare if they don't know what they're doing with the SBA. All right. Well, Jake, that sounds like you probably put a lot, a couple extra gray hairs. on your head. I'm sorry, you went through that.

But I think a helpful war story for our listeners to hear, especially folks trying to close deals with SBA loans. So Jake, as is our tradition here, we want to give you a chance to tell listeners where they can find you on the internet or shout out to any way they can help you, send your deals, donate to your favorite charity, whatever it is. Yeah, on Twitter, I think it's at Jakely Wakely. Don't ask me why it's that.

I created a long time ago, haven't changed it. If they want to email me, Jake.wakely at budget dashmovers.com. I know a few people have reached out over the last year to have conversations. I'm happy to chat. You mentioned charity. I completely forgot. I run a nonprofit as well. So if anybody wants to reach out about that, the info is on my Twitter.

It's the mindful foundation. So happy to have it to talk to anybody about that. that. Awesome. Very cool. So find Jake at Jakely Wakely on Twitter. Thanks for being on Jake. Really appreciate it. Great stories. That wraps up another episode of Acquisition of Anonymous. We will see you guys next time.