Andrew GazdeckiSerial Entrepreneur Driving Startup Acquisitions

How does the SBA view businesses with heavy reliance on intellectual property or intangible assets?

21 Oct 2024

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This is a YouTube video titled "How does the SBA view businesses with heavy reliance on intellectual property or intangible assets?" containing a discussion between two speakers about how the Small Business Administration assesses loan risk, focusing on cash flow stability, profitability, and business evaluation criteria relevant to buyers and lenders. The content was created in October 2024.

How does the SBA view businesses with heavy reliance on intellectual property or intangible assets when assessing loan risk? But generally, what they're looking for is strong cash flows, strong profitability and durability. So time and market, is there a bunch of revenue that's up and down? Is the business unprofitable one year and then wildly profitable the next? What they're looking for is a stable business that can be easy to predict, how it's going to perform. Once the acquisition closes, they've issued the loan to really ensure again that they're going to be able to make their money back on their loan.
How do I go about evaluating, evaluating the business? And while that's a giant question, that could be a webinar in itself, they're looking at items that may have a lot of parallels to what you would look at as a buyer. What is the consistency of cash flow? What is the strength of the customer base and recurring revenue? What are the sales channels? Is it uber dependent on me as the founder being the face of the franchise, if you will? And if so, how do I combat that? If business is going to be sold to another owner's hands.