SMB Acquisition Financing up to 85% LTV

Financely structures acquisition debt packages for sponsors buying cash-flowing small and mid-sized businesses. We combine senior secured loans with bridge or mezzanine facilities so total leverage can reach up to 85% of the purchase price where cash flow supports it. You bring a signed LOI, a data room, and real numbers; we bring lender-grade underwriting, a targeted process, and term sheets that can close.

SMB Acquisition Financing Term Sheet

Indicative and non-binding. Subject to KYC and AML clearance on sponsor and target, full credit approval, executed documentation, perfected security, and insurance where required.
Key Terms
Eligible Borrower Acquisition SPVs or operating companies controlled by experienced sponsors. Minimum acquisition size supported is around USD 500,000 purchase price. The target must have positive, normalised EBITDA and a clean compliance profile. No sanctioned parties or prohibited sectors.
Eligible Target Businesses Cash-flowing SMBs such as:
  • B2B services with recurring contracts.
  • Healthcare and allied health services.
  • Software and tech-enabled services with subscription or contracted revenues.
  • Light manufacturing, specialty distribution, and logistics.
  • Multi-site and franchise businesses with proven unit economics.
Pre-revenue models, speculative crypto, gambling, weapons, and other high-risk sectors are generally excluded.
Facility Size & Types
  • Total debt package: typically USD 500,000 to USD 50,000,000 across tranches.
  • Senior secured term loan as the core facility sized off purchase price and EBITDA.
  • Optional revolver for post-close working capital where justified by the model.
  • Bridge / mezzanine debt arranged to close the equity gap and increase leverage where cash flow supports it.
LTV & Capital Stack
  • Senior term loan usually up to 60% to 70% of purchase price or enterprise value, whichever is lower.
  • Total senior plus bridge/mezzanine debt can reach up to 85% of purchase price where Financely arranges the bridge and the business cash flow is strong enough.
  • Minimum sponsor equity at risk of at least 15% of purchase price, via cash, rolled equity, or a mix agreed with lenders.
  • Final leverage is set off recurring EBITDA, cash conversion, and stress-case coverage ratios.
Pricing
  • Base rate: US Prime or an agreed reference rate (for example SOFR, SONIA, or EURIBOR plus a credit adjustment spread).
  • Senior facility: typically Prime + 300 to 550 bps per annum, depending on leverage, sector, and sponsor profile. Floors on the base rate are common.
  • Bridge / mezzanine: typically Prime + 700 to 1,200 bps per annum, with potential PIK portion and 1% to 3% exit fees.
  • Commitment fees: 50 to 100 bps per annum on undrawn committed amounts, where applicable.
Tenor & Repayment Senior term loan tenor is typically 3 to 7 years. Repayment combines scheduled amortisation with cash sweeps once leverage falls inside target ranges. Bridge or mezzanine tranches usually have 3 to 5 year maturities with bullet or partially PIK structures, subject to cash generation.
Collateral & Covenants
  • First-ranking pledge over shares in the acquisition SPV and target entities for senior lenders.
  • First-ranking security over core assets (receivables, inventory, IP, plant and equipment, key bank accounts).
  • Subordinated or second-lien package for bridge/mezzanine governed by an intercreditor agreement.
  • Key covenants include caps on total and senior leverage, minimum interest cover, minimum liquidity, and restrictions on extra debt, large acquisitions, and distributions.
Required Application Package The 3 to 5 day senior timeline applies only when the data room is complete:
  • Sponsor KYC, ownership chart, CVs, and brief net worth and liability overview.
  • Target financials: 3 years of accounts, trailing twelve months, and current management accounts.
  • Revenue and margin breakdown by customer, product, and geography, plus any existing quality-of-earnings work.
  • Signed LOI or advanced SPA/APA draft, with clear sources and uses of funds.
  • 3 to 5 year business plan and integrated financial model with base and downside cases.
  • Summary of existing debt, liens, guarantees, and any change-of-control issues.
Senior Facility Process & Timeline For routine transactions with a complete pack, senior debt can reach indicative approval in around 3 to 5 business days:
  • Day 1: Review of sponsor, target, LOI or SPA, and model. Initial senior sizing, LTV, and lender appetite check.
  • Days 2 to 3: Credit work-up, EBITDA normalisation, cash flow coverage tests, and draft senior structure (size, tenor, covenants, pricing range).
  • Days 4 to 5: Alignment with shortlisted senior lenders and issuance of an indicative senior term sheet for client review.
This is an approval-in-principle stage, not funding. Legal documentation and conditions precedent follow on a longer timetable.
Use of Proceeds Purchase price under the SPA or APA, refinancing of permitted existing debt, transaction costs and taxes, and agreed post-close capex and working capital. No dividend recaps, speculative investments, or unrelated party loans at closing.
Key Sponsor Considerations Sponsors should expect:
  • Real equity at risk of at least 15% of the deal; informal or unsupported equity is discounted.
  • Valuations to be tested against actual cash flow; overpaying pushes more of the structure into equity or expensive mezzanine.
  • Quality-of-earnings and core due diligence to be mandatory on meaningful transactions.
  • Tighter covenants and reporting if leverage and LTV are near the top of the range.
  • Projection realism to be scrutinised; current and near-term cash generation drives credit appetite.
Governing Law England and Wales or New York law, to be agreed with lead lenders and counsel. Jurisdiction or arbitration framework is set during documentation.
Fees, Retainer, and Success Fee

Financely Retainer: for SMB acquisition mandates, the retainer is formula-based to avoid artificial thresholds:

  • Retainer = USD 5,000 + 0.15% of the target total debt mandate amount.
  • Minimum retainer: USD 5,000. Maximum retainer: USD 35,000 per mandate.

This produces similar economics to USD 5,000 upfront for smaller deals and around USD 12,500 upfront for a USD 5,000,000 mandate, without allowing clients to game the fee by staying just below a fixed ticket size.

Success Fee: 2.50% of funded debt proceeds across senior, bridge or mezzanine, and any other debt instruments arranged through Financely and its partners, payable at closing out of proceeds.

Third-party costs (lender and sponsor legal, due diligence providers, valuation, R&W insurance, filings, and taxes) are for client account and are typically billed directly by the respective providers.

Closing and Funding Timeline
  • Senior indication: 3 to 5 business days for routine transactions once the data room is complete and clean.
  • Bridge or mezzanine: up to 45 days for routine transactions to run a targeted process with private credit funds and mezzanine lenders, align intercreditor terms, and confirm pricing.
  • Full closing: documentation, conditions precedent, filings, security perfection, and coordination with the SPA or APA typically result in funding within 30 to 60 days from mandate for straightforward structures.

Cross-border carve-outs, distressed assets, complex regulatory approvals, or weak documentation can extend these timelines.

Compliance, Rules, and Standards
Facilities are documented under LMA-style or New York law leveraged finance standards as agreed with lead lenders. All parties are subject to KYC, AML, and sanctions screening across sponsor, target, and key shareholders. Anti-bribery provisions and use-of-proceeds protections are mandatory. Financely acts as arranger and advisor through regulated partners on a best efforts mandate. We are not a bank and do not take deposits.

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FAQs

This section answers the questions sponsors usually ask once they start preparing an acquisition, beyond the numbers on the term sheet. The aim is to help you decide whether you are a fit, what you should get ready in advance, and where Financely can add real value in the process.

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