How do I secure lending to acquire a financial practice?

If you’re interested in buying a financial practice but need additional financing to get the ball rolling, there are a number of considerations to take into account. On this week’s Ask An AdvisorLaw Expert, we’re talking with Tad Burton, J.D. about what factors in when determining whether an advisor can qualify for an SBA loan.

If you’re looking to buy a financial advisor practice, would like to find out what your book of business is worth, need guidance on RIA succession planning, or a loan to purchase or grow an advisory firm, AdvisorLaw offers integrated lending options and SBA loans to advisors.

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In order to qualify for SBA lending, there are a number of factors at work. First of all, what is your current practice worth? How does it generate its revenue? What is the practice that you’re looking to acquire worth? What type of revenue does it have — is it recurring revenue? What does your credit score look like? Do you have a down payment? Do you have your tax returns and financial statements from the past few years put together? 

One of the key points is that a lot of local banks certainly offer SBA lending, but what we’ve seen in the past is that they don’t really understand how a financial advisor’s practice is organized, and they don’t entirely understand how a financial advisor is compensated. In the past, with many of our clients, we’ve been able to help bridge these gaps and, using our expertise, ultimately get these transactions closed.