Acquisition Financing Services

Typical steps and timing of a financing engagement are outlined below.

Please note that timing and costs given here are estimates, based on a hypothetical "typical project." This outline doesn't constitute a commitment as to services, costs or timing of any particular project. Costs and services for each specific project are quoted by RMC in an engagement letter for that project.

Typical Steps:

1. Initial consultation (usually by phone).
Timing: approximately 30 minutes.
Outcome: determination if SBA-backed acquisition finance may be appropriate; decision whether to go ahead with further investigation.

2. Pre-qualification of borrower (usually via email and telephone). RMC provides checklist of needed information (self-obtained credit reports, resume, tax returns) and forms for SBA qualification (personal history, personal financial statement).
Timing: usually complete within 3 working days of receiving client's forms and information.
Deliverables: pre-qualification letter; or outline of barriers, and alternatives to mitigate.

3. Pre-screening of business for financing feasibility (usually, via email and telephone). Can be done together with pre-qual of borrower, above. RMC provides checklist of business financial information, to be gathered by borrower or by seller's business broker.
Timing: usually done within 3-5 days of receiving business financial information.
Deliverable: financing scenario, outlining sources and uses of funds, expected amount, rate and term of bank and other financing; amount and terms of seller financing; amount of required equity injection (down payment) of borrower. Alternate scenarios (for example, including or excluding real estate) may also be shown, and alternative methods for meeting equity injection are often specified.

4. Engagement letter and initial retainer. If client accepts a scenario, and decides to engage RMC, we enter a contract specifying terms of engagement, progress payments and total ("not to exceed") fee for services.
Total Consulting Fee: hourly rate, typically limited not to exceed 1.5% of financing amount.
Typical Retainer: $750 to $1,500 due upon signing of engagement.

Note: fees are most often at the lower end of the ranges stated here.  Complex projects (multiple affiliates, multiple lenders, difficult issues) are quoted at the higher levels.

5. Bank proposal letter. RMC assembles a loan file, prepares analytical spreadsheets and a narrative loan summary, consults verbally with bank loan and credit officers, and delivers an executive summary to banks we've identified as most likely to approve this particular proposal.
Deliverable: proposal letter from one or more banks. Also known as a "term sheet" or "letter of interest," this letter outlines proposed sources and uses, down payment and seller finance, amount, rate, term and conditions of bank and other financing, and invites client to submit a full application, along with a processing deposit (refundable if bank declines.)
Timing: from the date we receive a complete application, 10-12 days (3-5 days for RMC's preparation; 5-7days for bank responses).
Typical Fee: $1,500 upon client's acceptance of a bank proposal.

6. Bank commitment letter. RMC collects, reviews and analyzes additional documentation required for submitting final, formal application to bank credit department. We prepare a final credit memorandum (narrative loan summary), spreadsheet analysis, and tabulated loan file, and submit to the bank. During the process of bank credit underwriting, we communicate with the credit analyst, adivise borrower of topics for interview with the analyst, gather and prepare any additional documentation or analysis required, and assist in any negotiations with credit manager and final decision-makers.
Deliverable: binding commitment letter from bank, with complete list of contingencies (appraisals, environmental reports, documentation) that must be satisfied before closing. Cash deposit toward closing costs (counted toward required equity injection) is usually required with return of executed commitment.
Timing: about 14 days from client's return of executed proposal letter & processing deposit to bank.
Typical Fee: $2,500 upon client's acceptance of bank commitment letter.

7. Loan closing. RMC guides borrower through the closing process, identifying priorities for meeting closing contingencies, recommending alternatives for satisfying bank requirements, monitoring and facilitating communication between bank's closing department and borrower.
Deliverable: closed and funded financing; business ownership.
Timing: about 3-4 weeks from client's return of executed commitment letter (1 to 2 weeks longer, for projects including real estate purchase).
Typical Fee: remainder of total consulting fee -- usually 60% or more of total.

Note: bank financing normally includes a substantial amount of working capital. Final fee is due after closing, when borrower has access to these funds. Typically, then, only the progress payments due in prior stages are an out-of-pocket expense to client.

Overall Timing: from the date RMC receives a complete initial application and loan file materials (in step 5, Proposal Letter, above) to date of closing is approximately 7 to 9 weeks (1 to 2 weeks longer, if real estate is involved.) Time at the start of the process, for borrower to assemble all application materials, can vary greatly. A motivated borrower working with a responsive seller can provide complete materials within 1 to 2 weeks. In especially urgent situations, the overall timeline can be compressed somewhat, but it's prudent to allow for the times indicated -- and in complex projects, or when special situations or issues arise, the timing can be longer.