Lender: Jeff Camilleri, President - Commercial and Mortgage Banking
Type: SBA 7a Loan, 10 Year Term / 10 Year Amortization, long-term fixed rate
Collateral Type: All Business Assets
A local financial advisor and entrepreneur who operates a professional services firm in the Clayton area came to CNB looking for a financing solution that would allow him to transfer his majority ownership to the other partners through a buyout. Our client built a sizable team and a large book of business primarily providing investment management services to business owners and high net worth individuals from an office in Brentwood, a suburb of St. Louis, Missouri. As the senior partner’s career matured and the firm achieved stable growth, it became time to execute the succession plan. The transfer of ownership to the junior partners has been part of the firm’s strategic plan for several years, allowing for a phased approach to the transition. Additionally, the owner will stay with the firm for a time after the buyout, providing the opportunity for remaining partners to gently transition and continue the firm's upward trajectory without sacrificing continuity.
The owners contacted their long-time and trusted commercial banker, Jeff Camilleri, to structure a deal by which the partners could obtain the financing they needed to finance the acquisition. Jeff proposed an SBA 7a loan, a loan program from the Small Business Administration created to help small businesses achieve access to capital. Some of the ways the 7a program provides access to capital are by reducing risk, capping interest rates, and limiting fees. With the help of an SBA guarantee, the four junior owners obtained financing for the buyout in a smooth transaction. The SBA 7a loan is a fully amortized 10-year term note with a fixed rate. The rate will be adjusted after the first 60 months with a new fixed-rate based on WSJ prime.
In addition to facilitating the business acquisition, Jeff advised the new owners to set up a working capital line of credit. A line of credit is a powerful business tool, affording the owners with liquidity so they may have greater buying power and are prepared for unforeseen expenses. Because the owners were going through the financing process for the buyout, the Bank already had the financials and supporting documentation needed for the line of credit, making it an opportune time to set up the credit line using life insurance as collateral, and with little to no disruption to the owners.
Business succession and legacy planning is a complex matter, involving many key advisors and, almost always, involves bank financing. Jeff worked with the seller, the buyer, and the other key advisors involved in the transaction to facilitate a smooth purchase financing process. Relationships are paramount to Jeff’s business success, and he looks forward to a continued relationship as a trusted advisor and resource to the firm as the new generation of owners take the reins.
CNB St. Louis Bank's Commercial Lending Team is ready to help you through all aspects of your business banking and financing needs - big or small; complex or simple. From financing options, deal structure, and local market knowledge to cash management and fraud prevention tools, we have the expertise to help your business thrive. We specialize in loans for family businesses, local businesses, franchisees, investment real estate, commercial real estate, manufacturing and distribution, owner operators, retail, and professional services.
All loans are subject to credit approval. Other rates, terms, and structures are available. CNB St. Louis Bank is an Equal Housing Lender.