In this episode of JackQuisitions, Jack welcomes back Alan Peterson (First Internet Bank) to break down the SBA SOP changes that are reshaping home service acquisitions in 2026—especially for buyers navigating licensing, seller equity, and deal structure.
Alan explains why the once-common “seller keeps 1–5%” strategy is fading, what’s replacing it, and why banks are forcing buyers to get serious about licensing before they ever sign an LOI. They also dig into why the buyer pool is smaller but higher-quality, what SOP updates are coming (and which ones just hit), and why electrical may be the next big home service category to scale.
What You’ll Learn
- The biggest SBA SOP changes buyers need to understand in 2026
- Why “seller retains 1–5% equity” deals are becoming harder to structure
- How licensing is changing deal flow in HVAC, plumbing, and electrical
- The best alternative structure: key employee on the buy-side
💼 Shoutout to Quick Staffers LLC
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💼 Special Thanks to First Internet Bank!
Looking to buy or expand a business? First Internet Bank is a National Preferred SBA lender specializing in acquisitions for the skilled trades. Their SBA loan program offers up to 90% financing for business acquisitions, partner buyouts, and commercial real estate—plus optional lines of credit to fuel future growth. Unlike traditional lenders, they take a “how can we” approach, making deals happen for both first-time buyers and experienced operators.
👉 Special Offer: Mention Owned and Operated for a reduced good faith deposit and a complimentary deal review + buyside prequalification.
Connect with Alan Peterson from First Internet Bank here
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JQ EP 38
[00:00:00] I am directly aligned with your success. I can't let you do a bad deal. I want to be objective when I'm evaluating opportunities and sometimes reality is, Hey man, let's just, let's just step away. I could pre-qualify you for $3 million today, but I need to know what is your licensing strategy?
How have the changes last year to the SOP?
How has that. Affected you? Are you seeing less buyers in the home service trades that need actual licenses?
A very common strategy was to have the seller remain one to 5% equity. That's gone away because now a seller, even if they retain 1%, needs to guarantee the loan. For a period of 24 months. That's something most sellers aren't willing to do.
Up and coming SOP changes that people should know about.
God, I hope not.
Welcome back to Jack Musicians. Today we have Alan from First Internet Bank on Alan. What is going on? Welcome back. How are you doing man?
Hey, thanks for asking Jack. Thanks for having me on too. Um, staying busy, [00:01:00] right? Um, we're getting into the new year and. Things are really, really still moving. Um, you know, which is, I don't wanna say it's abnormal in my world, Jack, but.
Usually I'll see a little lag and then we kind of pick back up around, you know, end of March, April as tax returns are being filed and, and finalized. At least we get drafts on the trust and verify we are cruising right through Christmas, man. So it's been a little hectic, but like I was sharing with you offline, um, my kids are.
A blast. I've been really enjoying my time with them. They're three and four. Um, we were talking about our kids riding bikes and, uh, you know, that that's been, that's been more exciting than anything else for me right now. But life's really good, man. Better than I deserve, and really glad to be here and, you know, cut it up with you and catch up, man, you know?
Yeah. I mean, last time we had you on was right before or at the beginning of the SBA shutdown, I think it was November. Mm-hmm. Um. So with that being said, like do you feel that the extra work going through the beginning of the year, are you just [00:02:00] clearing out the end of last year or is this new work? Like what does that look like from.
Uh, top, you know, 32,000 foot level.
Yeah, no, absolutely. So we had, we are through the backlog, but we certainly had one. Right. And that was really challenging as we were navigating the backlog. First of all, folks that we got their SBA authorization number already as a preferred lender. You know, we issue that.
In-house, right? So we, we were anybody with that, it was business as usual, but the reality was we didn't stop the machine, right? We're still issuing approvals, getting commitments out, and getting everything we could for closing. But until we had that authorization number, really nothing could happen. So in that timeline.
Things happened, like documents got stale, dated, we had to, you know, get updated stuff. Yeah. Sometimes sellers, uh, year to date performance wasn't as good as it was, uh, maybe two months prior what, what we were trying to close on. So that caused some headaches and ultimately it was a little bit of a traffic jam.
[00:03:00] I'd say we got through it. The holidays didn't do us any favors, but as of right now, I can report to you. It's business as usual and thank heavens. But we, we got everybody through and probably right before the Christmas break we were sort of like, okay, which is nice to level set that little gap and I.
Now it's, uh, it's Groundhog Day, man. Every day of my life is very similar. Yeah, right. Tax returns, zoom call. You know what I mean?
I, I love how you say that. Yeah. But like the reality of that, for anyone of us business nerds who love that, it's like you get to look inside hundreds and hundreds of different types of businesses and models commercial.
Residential. Mm-hmm. Home services manufacturing. So I know you say business as usual for you, but for the other side For, for all of us nerds out there. Like, that's awesome. That sounds like so much fun.
Listen man, I got the best job in the world. Not to be cheesy about that. I absolutely love it. I get to see so many different industries.
Obviously I'm very focused on the home services. Skilled trades mm-hmm. Are kind of my bread and butter, um, manufacturing as well, but you know. It's so cool. Not only the people, I get to [00:04:00] meet their stories, um, and, and just the operating element, right. I'm, I love small business, right? I'm, I'm like you. Yeah.
I, I really enjoy it. I, I don't think if it was so fun, I'd work so hard at it to be totally transparent with you.
Yeah, no, fair enough. I'm, I mean, that's why we do the show that someone messaged me some when some of our fan mail came in, you know, wrote me an email on LinkedIn and goes, Hey Jack, it's all super formal.
Ah, can we meet at this time? And this time I was like, Hey, here's my number. I said, Hey man, just text me. Yeah. Like, I'll call you on the way home today. We talk shop. I'm fine if I got the time. Like, let, let's, yeah, let's look at this deal you have. Yeah. Um, it, it's so much fun.
Yeah.
So that being said though, like.
Rounding out the midway of last year, there was a bunch of SOP changes in the SBA for people that are starting to move into buying their first business or even expanding their, their portfolio of businesses. Uh, what, how have, how have the changes last year to the SOP? How has that. Affected you? Are you seeing [00:05:00] less, uh, buyers in the home service trades that need actual licenses?
Are they just, you know, I don't wanna say working around the license, but working within the rules to satisfy the licenses? What does that look like?
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Well, you know, prior to June of 25, A, a [00:06:00] very common strategy was to have the seller remain, you know, one to 5% equity. Right? Do you stock sale? Yeah, 95%. Um, and the seller didn't have to guarantee we'd qualify the business that way the buyer would get the license on their own and buy out the seller, right?
So they got their second bite at the apple because hopefully that 5% is worth a lot more. Two years down the line than it is today, right? Mm-hmm. Um, that, that's gone away because now a seller, even if they retain 1%, needs to guarantee the loan for a period of 24 months. That's something most sellers aren't willing to do.
In fact, I looked at a deal where a guy wouldn't do it for his son. So to any, uh, first time buyers out there, yeah, I'm not saying it's impossible, but let's, let's, let's, as always think about the seller and where they're coming from, um, what, what I've seen people do and embrace Jack and as a strategy, I like.
But it's not always possible is to have a key existing employee. Right. A non ownership. They don't have any [00:07:00] equity of the selling entity come in on the buy side, 5%. It works two ways. One, we can qualify the business. Two, it's a great retention play for one of your key individuals, right? That's generally good for culture.
It de, it definitely supports transition knowing that, you know, you've got someone who busted their tail and really helped build that business that there was an exit on looping them in at 5% to qualify. And, and by and hold is something I've seen a lot of folks leaning into. But the reality is there's a lot of businesses where the sellers the only guy that that has the license, right?
So with those scenarios, I'm finding folks shying away or looking at. Adjacent businesses that do not require licensing or they move their target to different geographies. Um, I've definitely seen a lot of the noise clear up. Jag, I, I know that I can kind of beat the dead horse on my thoughts on Instagram gurus, and I know me and you have talked about this pretty transparently [00:08:00] on a outside of this, but that stuff's going away and I think that's really good.
And I've had to tell some people, man, like, listen, you do not have to be. A plumber, you know, uh, you had that great meetup in Miami. Uh, thanks for including me in that. And, you know, we got to meet a bunch of entrepreneurs that were pretty transparent that plumbing is a dirty job in more ways than one. I mean, there's HVAC guys that don't want to get into plumbing.
A tech guy that's never managed the type of employees that, that, that, that this is required. Yeah. My message is this, like if you wanna get your hands dirty, you wanna learn, you wanna put the work in, let's have a convo. Right? But there is nothing wrong with keeping a Husky W2 with good benefits when you've got a wife and you young kids at home because you want to be a plumber.
There's other ways to get it done. There's other ways. That are related to what you've done. And that would be my advice. 'cause I'm not seeing, I'm not, I'm seeing a different quality of buyer jack, and they're people that are talking to me about transition. They're people that are listening to you or talking to me about, Hey, I, [00:09:00] I'm thinking about this to retain this key customer.
You know, have you seen this work? Those guys that are asking those questions. I love working with them. And guess what? More often than not, you know, they, they pay as agreed, right? Uh, it, it's, and that's important too, because at my stage I'm judged on my portfolio performance, not originations, right? So for that reason, I am directly aligned with your success.
I can't let you do a bad deal. Not to say I'm like walking on water here, but I want to be objective when I'm evaluating opportunities. And sometimes reality is, Hey man, let's just, let's just step away here. Um, but yeah, I'm seeing better buyers. I'm seeing less of them, but they're higher quality. Um, and we're seeing sellers are.
Sellers and brokers. Or sellers and brokers. Man, you know better than I do, how that
goes. Yeah. But it it also forces the market, right? It does. I've seen more deals this year. Yeah. Go back to the drawing board. 'cause they just don't work and the seller goes, it doesn't make sense for me to sell right now.
I've had two this year Yeah. That had offers on them. The offers weren't anywhere near what they wanted. And so they [00:10:00] said, Hey, I'm gonna operate the business for another two years. Get this right and then go back to the drawing board. Because I think what's been nice is, I don't wanna say this, the stupid money has dried up, but the, the valuations have gotten more reasonable.
Mm-hmm. The buyer pool has shrunk, which has caused less pressure. Mm-hmm. And it, it is getting. Um, is making it so that's forcing deals to come into a area that is, uh, probably more realistic, I guess, than than historically in 2022 or 2021 it was.
Yep.
Um, in terms of, uh, let me ask you this question. In terms of, uh, buyers going out, have you seen buyers go out and pre-qualify, uh, or.
Pre partner with, uh, somebody who has a license beforehand and then go into the deal with this person already in play?
Yes. So I have seen folks start that part of their search prior to their actual search. So what. That's important because you know, [00:11:00] hey, great, we have a licensed individual now. Now I can be an HVAC guy.
You know, like it, it's more like I know that this is not only the person that can qualify the business, the person that can tell me what to look out for, but it's a real partnership. They know that they like each other. They know it's not gonna be a passive hang, you know, Hey, I'll qualify your business and go do something else.
Um, we have seen that and I've seen people have it work with like Facebook groups. That was like one, uh, ever. I think that there's other people that are just doing however they do it, reaching out to licensed individuals, um, and, and just determining if they're ready to take the next step and if they feel like they've hit the ceiling at their organization.
Um. That's where, that's where we find some value on the buy side. Mm-hmm.
Yeah, I mean, we had somebody on, um, mother Plumbing out in, uh, Dallas, and, and that's exactly what he did, is he leveraged his network to get in contact with people that he trusted in the plumbing arena, and then asked for references to anybody who might be wanting to [00:12:00] start their own business in plumbing.
Then, like he wound his way by asking for the references and the references and ended up finding an individual who wanted to, uh. Helped start a plumbing company and ended up now growing his plumbing company. I think they're on a run rate for 8 million in like wow. 12 or 16 months. Oh. Like when? Zero to 8 million in 16 months.
It was absolutely phenomenal.
That's
awesome. Um, but yeah, like a great way, I think to do it is, and also, I mean, showing up to a deal with like your qualification in hand, either personally is like, Hey, I have my license, or BI have the business acumen. I found the license is a, is a big signal to the seller.
Like, Hey, I'm serious about this.
You couldn't be more right on that. Like, so typically, as you know, Jack, I'm really big on having buyers reach out and get pre-qualified, right? It lets them know how much. They can actually borrow against a business. Right? And how much, you know, confidence I have in their ability to execute based on their [00:13:00] management experience, summary, resume, you know, have they managed budgets, people operations?
Right? So if they come to me and they say, Hey listen, you know, here is my whole story and I want to buy. Home services business, I pivot immediately to like, I could pre-qualify you for $3 million today, but I need to know what is your licensing strategy. You know, I'm happy to provide a letter of support, so the sell side takes you seriously, but I need to know that you have something working.
That you are really going to have a strategy in place that's gonna work for the bank. It's gonna work for the SBA, it's gonna work for the buy side. Um, and, and obviously the seller wants their exit as well, but that's something we're talking about much earlier in the process. So I love when people are proactive, come to me even, even while they're putting their feelers out.
Know, Hey, how much can I borrow against? 'cause that helps them sometimes frame the conversation to a licensed individual and say, listen man, I could take down a $3 million business with these characteristics in this [00:14:00] geography. Are you interested in that? Rather than being ambiguous like, Hey man, we should buy a business together, stranger on Facebook.
You know what I mean?
So it's the stranger I met like two days ago. Yeah, exactly.
Exactly.
And, and then, I mean, before I beat the dead horse here, please. Um, any, is there any whispers or up and coming SOP changes that people should know about? Is there anything new and, and fun and exciting. I know, right?
More that means like headaches for you, doesn't it? Just like, oh, we have to figure it out now.
Listen, man, I mean, the deal is as long as they keep moving the goalpost, they can't replace me with the robots. Right? So, you know, my kids are. Yeah, they, they, they go, yeah, they, they're, they're young. So I gotta, I, I got quite a bit of run rate in me on this.
I love what I do, but no, all jokes aside, I actually posted an article about this on, uh, LinkedIn and, uh, Twitter where I have, where I stink at Twitter. But anyway, um. They just relaxed the rule on [00:15:00] 100% ownership of US citizens that had just happened. And what that means is now 5% can be a non-US citizen.
And of course there's exclusions, but what we've seen previously is people had good contacts that. We're visa holders, right? They've been paying fed taxes for years, but they weren't US citizens, so they couldn't have that 5% or investors. Right. Even a passive investor at 1%. Yeah. Unless they were a full blown citizen, they were out.
They've, they've, they've relaxed that again, so we can take in, um, outside folks. The, the, the caveat though is they tightened up on a scenario that I've never seen personally. It's when a US citizen is living abroad. They are no longer eligible regardless of their citizenship status. I saw it one time, uh, with an individual he was living with, uh, his wife.
His wife was in the service. They were stationed in Germany. Technically that would be something that we'd have to address. I'd probably. Ask the SPA first [00:16:00] is, it's a, it's a service member man. If we're gonna make an exception, it ought to be
Yeah,
he
this, this is the
guy. This is the guy, right? Yeah. And he's gonna move home to do it anyway.
And I think that scenario might work, but in general is to make sure that it's not for expats, it's for real citizens. And of course, no, like illegal immigration. Issues. It's someone that's kind of in the system and vetted already. But I was happy to hear that because we've seen great folks, you know, either Canadian or Mexican.
Obviously the two most common and we can't help 'em now. We can. So that was the newest update and I'm sure there'll be more Jack and I'll make sure you're the first to know.
Yeah, yeah. No, we, because there's a lot of folks in in Canada that I know that are running just absolutely phenomenal. Uh, home service businesses have exited, they want to invest.
Um, so that, that makes a lot of sense. That. They're relaxing that rule because there, there's a lot of money in, I mean, the markets are different, don't get me wrong, but there's a lot of money in Canada that would love to have a piece of some home service industry here in the us
and I would love to be [00:17:00] able to tell the story in my writeup that the 5% owner got an exit from successfully building and scaling.
You know, that that's, that's significant too. Let's not forget.
Yeah. That's awesome. Sweet. And, and so with that, any, you know, you know me from whatever you can legally release and legally say, I don't know what the laws are around how much you can talk about deals that you've done. I know you can do 'em from a very high level.
Yeah. But any cool. Or wild industries that you've worked in recently where you just went, wow. I've sold a beekeeping operation in, yeah. Florida for 6 million. Yeah, like that would be, that'd be pretty badass. Yeah. Anything like that that you've run across recently?
I, I guess it's not that abnormal. It's the first one I saw it.
It was a business that's specifically sold hair pieces. So two pays, I guess. People are still doing that in 2026 and the margin suggests a lot more are doing that than we realize. That was a really cool business. 'cause I didn't anticipate that. And I'm going through the seller [00:18:00] financials, I'm like, dude, we're getting a QOE here.
Right? And you guys are like, oh yeah, because you gotta get financial due diligence. That's non-negotiable for me. If you wanna go proof of cash, we'll talk about it, but you gotta do something third party, uh, to protect yourself. Right? But anyway, yeah, this and the financials were real. That's the punchline there, Jack.
And, and I'm looking at it, I'm like, there are so many ways to, to, to pursue entrepreneurship, uh, in, in the USA, that being the most unique, uh, lately for sure. And, and we got home on it. It wa it wasn't a monster deal, but it was a good deal. And, um, you know, there, they're really enjoying it. And I know what you're thinking and, and what you're gonna ask.
So I'm gonna beat you to it. Yes. The borrower had a full head of hair. It looked great. It was, uh, you know, he could just comb in slow motion. Uh,
yeah,
right. It was like Johnny Bravo, if you remember that cartoon. But yeah, it was kind of like that
as, as a extremely bald individual Right. Who would never wear one.
Right. I do get targeted by all the algorithms, so I see 'em. Yeah. Uh, and, and I think they're not, they're not the old style. Like they're, they're actually. [00:19:00] They're actually nice now today. Yeah. Um, I almost wanna buy one just to, to mess with my wife is like, show up at home with like the glued hair top, but I could just never grow the, the ring around.
It'd be too terrible. Um. But that, that's interesting. Yeah. I mean, do you do a lot of EI mean, I would consider that we're probably in the e-commerce space.
Yeah. So we're not, I'm not really touching e-commerce ever. They had a, they had a brick and mortar, they sold a lot online, but they actually had a brick and mortar where they do consultations in a secondary market outside of a major metro in the Midwest.
So like for us, we liked that they had relationships, um, honestly, with, with oncologists, right? So folks that were going. Through cancer treatment, were a a segment, but the vast majority of their revenue. Was men's, was men's hair pieces, and they were beautiful hair pieces. Says my credit, you gotta keep an eye out.
For my 0% female audience here, my 1% female audience. You gotta watch out for those guys in their hair pieces. Yeah,
yeah.
They're not real. They're not real [00:20:00] floating around.
They look better than you'd think. You know, so,
yeah, so that's awesome. I love that. Yeah. Yeah. Entrepreneurship is, is the, the more you keep an eye out for it, the more opportunity you see around every corner.
Yeah. And that's super, super cool. A any other like really neat deals that have come through recently?
If you're buying a business, buying out a business partner, or buying some commercial real estate in 2026, Alan Peterson is someone you
want. On your side. He spent over the last decade structuring deals nationwide and is one of the best in the industry.
And he is because he is hands on. He works with owners and operators and new buyers from start to finish, and that's his specialty. And with the SBA seven A loan, you can finance up to 90% of a deal access, flexible collateral options, and even secure long-term loans, 25 years on real estate. Click the link in the description below and get a reduced good faith deposit as well as a complimentary deal review and the buyer prequalification with Alan Peterson at First Internet Bank, or head on over to [00:21:00] alan FI b.com.
That's A-L-A-N-F-I b.com.
I had a individual that. You know, he took down his first business. It was in the home services space. Gonna keep it high level. Um, but he was in the home services space, um, one of the two industries that share an N-I-A-C-S code, right? Yeah. HVAC and plumbing. Uh, he, so he ended up.
Ultimately taking out his first deal, $750,000 loan, he got the seller to hold a seller note on standby. Um, you know, Jack, to your point earlier, as there's a little bit of a market correction, we found sellers are not scoffing at that anymore. Right? They're, they understand if they like it, they're gonna do a 5% note on standby, uh, more often than they were, uh, previous anyway.
He got in that deal for like $40,000 and he just recently closed on deal number two, right? Which was an enterprise value of, uh, 2.5 million bucks, right? So, so because of SBA seven A expansion, the cash flow [00:22:00] worked. We did it zero down. Right? So now this, now this guy, when he eventually gets an exit or buy and holds whatever his strategy is, his cash on cash is pretty wild for the EBITDA that he has now through inorganic growth with 40 grand out of pocket.
You know, he is, he's, he is a Toyota Corolla in if. That's what they cost now with the good trim level.
Yeah.
Right. And, and, uh, and he's got, and, and, and he's got a real, he's really trying to roll to an empire. What was good about him though, he waited, you know, two years till he really, really had a grasp on the op operations, um, before he did anything.
We talked about that. I'm like, dude, let's just make sure your first year wasn't a home run. Uh, and let's make sure. We're stable and he was, but that was really neat. Um, but yeah, man, it's just been sort of, a lot of people are coming in and they realize they can't solve the licensing issue, Jack, so they're pivoting to things that are sort of in that world, um, but not, not exactly the same.
Um, whether it's a, we have a gentleman looking at a deal that. They [00:23:00] take lead generation in their market. They go out and close the customer, then they sell the deal. Uh, whoever will give 'em the best wholesale, making the spread. Right. So that's kind of interesting. That was a, a, a guy that really liked roofing, but he, he had no business being a roofer.
He knew that, but he was good at running sales team. So that, that was kind of something I saw that was kind of interesting. Um, there's just a lot of ways, man. It's, it's, there's a lot of opportunity out there, but you just have to keep your mind open and you have to make sure that. You're being objective.
Don't let entrepreneurial optimism make you make a run at a deal with, you know, negative ebitda two years in a row, you know, praying to God.
Hey, yo,
hell yo.
Yeah. Yeah. That'll get ya. Um, you, you threw me for a leave there. Um.
Sorry, Vince. It's been a while. No,
you're good.
I gotta keep you sharp, Jack. It's been a while.
Yeah.
You got me last time, I think. 'cause I forgot the NICS code thing. That's, that's the real reason I made sure to bring that up for the record.
Yeah. And, and so with that though, like, are you still, are you still seeing a [00:24:00] lot of that strategy? I know that for a lot of current owners, they don't actually know about that.
Is that, do you feel like that's expanding or kind of just status quo in terms of it's how people are utilizing it?
No, it's an education piece all the time. I, I like to make sure that post-close, when I'm talking to my clients, I kind of put that on the radar. Um, I'll let them know up front it's possible, but also that any bank is gonna want to see stabilization.
You know, we get guys that'll blast me with four biz buy, sell listings at once. That don't make any. Yeah, that's not the way. Yeah, we're not gonna, you're not, you don't turn into Warren Buffet overnight. Like, it, it's insane to think that way, but they don't know that. But I've seen a lot of people interested in electrical jack because of the noise around data centers popping up in a lot of places.
People are bullish on that. And, you know, work on the campfire is there's not enough electricians. But that's the narrative in all your guys, your audiences, industries, your industry. Yeah. Everybody's saying like, we've got a shortage of everything right now. Electrical. That's the commentary [00:25:00] I've heard twice, uh, in, uh, in the last.
Three weeks or so specifically?
Yeah. I mean, data science, I'll, I'll put people onto this is my thesis is Yeah. What you're seeing historically is, uh, what's happened in HVAC is that it was extremely fragmented market. Private equity came in, bought it all up, um, transformed the market into kind of a service and sales organization from a repair and new construction organization.
And then we saw it in plumbing. Kind of around the same time maybe, maybe before, maybe after. But what I think we're running into now is that same realization is has not been it. It's been done, right? The try trades is definitely something that's focused on service that has been done, generators has been done, but home service for electrical is still extremely fragmented.
So if you go into your market, you Google hvac. Contractor knew me. I did this with someone two days ago down in, in, um, north Houston, and there was 23 HVAC [00:26:00] contractors in a three mile radius. And then we did it for plumbing and then we did it for electrical and plumbing was 10 and electrical was three.
And the highest amount of reviews for a single electrician, uh, who was doing home service work. Was eight or 16. And so where you would compete with somebody in the HVAC space that had 1,349 reviews and pretty much own that market, and then a secondary and a third tertiary player who each had five, three to 500 reviews each.
You could move into an electrical, you could employ the same strategy. I mean, there's a lower call volume and immediate need of a lot of electrical work, but still. Um, if you employed the same strategy, you could be a market dominator in that said market within weeks.
Yeah, I, yeah.
And. Like we've done it in plumbing in certain markets that are just under underserved.
And, and I think you see more of that now in, in plumbing and, and electrical mm-hmm. Than you historically did in HVAC. So I think in the near future, you are going [00:27:00] to see a higher push for electrical businesses because I think that there's going to be the rollups and it's, it's 2018 for electrical.
That's, that's where I put the market at. Mm-hmm.
Yeah, I agree wholeheartedly. And you know from the SBA lens too, that $5 million cap. It's zero for electrical, right? You could have $5 million of debt on HVAC plumbing combined, and you've got. A fresh start with electrical, same business, same operations, same, you know, everything.
But you would have to put a down payment in that scenario, whether it's the 5% with a note or 10 in, because it's a different, it's a different animal. But I, I'm, I'm pretty bullish on that. I still like plumbing a lot though. I mean, I like, I love plumbing. I like plumbing, man. I, I could never do it. Uh, you know the gentleman, uh, at the meetup, uh, Jack, I dunno if you remember, he goes, Hey Al, you like it so much.
Why don't you hop in the truck with me next time you're in South Florida? Uh, yeah. I, I, I, uh, I said, maybe I didn't mean it. No way. No, I'm a paper pusher brother. I know my space. [00:28:00] I know where I need to be. I got all the respect in the world, uh, for it, though. I mean, it's great. It's, it's amazing. But I just, I like plumbing a lot too, man.
I, I really do. I love hvac, don't get me wrong, but to your point. Man, it's, it's getting to be a pretty full room. Uh, in a lot of ways
it's a full room and there's less seasonality. Like, don't get me wrong, I'm the HVAC jack on Twitter. I love hvac. HVAC is our primary business. Yeah. That being said, like plumbing, there's no seasonality or very low seasonality.
Mm-hmm.
Um. Uh, decently high tickets. You can get really high tickets on re pipes and, uh, maybe not water heaters, but, um, re pipes, uh, drains, things of that nature. There's still a lot of money to be made in the industry. And the downside though is yeah, some, some days you gotta get your hands dirty. Uh, you know, Alan, I did, I did one call about a year back, and I, and it.
Threw me off of plumbing. I was like, it was a drain clean. I was like, oh, this is gonna be easy. I'll just get out there with the unit. First off, the plumbers are all dying laughing when I get back and I'm like, why? What's so funny [00:29:00] guys? What's so funny? And they look at me and they go, Jack, you wore the wrong gloves.
Because I thought they all wear the mesh gloves that have like, that are like cotton so that the liquid that gets in your gloves falls out through and they just live with that. Normal to them. Alan, I wore like the rubber gloves so that I wouldn't touch anything. 'cause that was my concern. I was like, I don't want to touch anything.
Yeah. Well, lo and behold, what happens when you wear rubber gloves, which they all knew and I didn't, is the liquid gets inside the rubber gloves and instead of draining out the, the cotton stays, it stays inside the rubber gloves on your hands. Um, so. A, I learned there's no getting around touching it. Yeah.
And B, I learned that I need to keep a lot of hand sanitizer in the car when I do a plumbing job. I mean, I was a hand sanitizer. I've used the entire bottle. I'm not being a hyperbolic when I say that. Like I use the entire bottle steering [00:30:00] wheel.
Yeah.
Yeah. Car door handle everything. So gross.
Yeah.
That job ended up being like a $13,000 drain job.
Yeah. So,
yeah.
Not bad.
Yeah.
But disgusting.
Well, you offset the cost of the, the sanitizer for sure. It dig in your, it dug into your margins
a little bit. Yeah, I didn't add that in.
You know,
you know, my material cost got hit by like the gallons of hand sanitizer. I needed to order after.
Yeah. Yeah. Cogs.
Yeah.
That's too fun. Yeah. And, and for anybody, just to take a step back outside of my disgusting plumbing story, uh, for anybody not listening or who didn't catch the last episode with Alan, go back and listen to it. It's great. I think we really get into the expansion loan. Um, but just. Too long didn't read.
Version is, in my opinion, not financial advice. Um, the SBA is one of the greatest opportunities of our generation to create generational wealth for you and your family. And the strategy behind it is you go and you buy a business. For me, it's hvac, [00:31:00] and you grow that business for two years, you stabilize it, you show profit.
You do a good job as a business owner, and then in two years you say, Hey, I'm gonna go and buy another HVAC business. Well, if you've built enough equity in your current business, the bank and the SBA will allow you to use that equity as the down payment. So if you bought. One business for half a million dollars on the SBA.
You build it enough so that you get enough equity, you can go take out another $4 million. Uh, business, um, that in the same category, in the same regional location with the same N-A-I-C-S code. Uh, but that being said, you can still go buy a $4 million HVAC business, which again, the metrics on that are gonna be, it's gonna be worth maybe six to $8 million in top line.
And so within a few years of utilizing. This kind of strategy, you could essentially build, um, you know, two or three, or I should say not build, but take [00:32:00] down from an acquisition standpoint, two or three really big, large businesses of similar type and grow a business faster than you would be able to do organically.
So, uh, it's an interesting strategy. It's one that I think that is an one of the most awesome opportunities, uh, to take on. Uh, leverage and build a business fast. And then, uh, if you wanted to, at that, you can, at that time, you can either stabilize, keep that business forever and off, pull off cash, or you could exit, um, to a larger conglomerate or PE group.
So that's the Too long didn't read. Uh, that's, uh, I believe one of the biggest opportunities of our lifetime. Uh, this is not guru advice, though. This is really hard strategy to do. Yeah. Uh, but it is a way to be able to generate, you know, a, you know, like Alan was saying, that that gentleman's taking $40,000 in cash and turning that into.
Over three years, turning that into, you know, three or $4 million in enterprise value. Me personally, same thing. I [00:33:00] put my first deal, I put 90 K in 90 K, and now our enterprise value is somewhere, somewhere in the millions, multiple, multiple millions. Yeah. And so point being is that, um. You know, it's a good opportunity if you were able to operate and do a good job, but it's not without its risks.
So
For sure, for sure. Yeah. And you do with real estate also. I mean, some people eventually do wanna buy the building in a buy and hold scenario and strategy. Mm-hmm. You know, you can, you could. Buy from your landlord or another building with zero down as well. Right. So that's, that's the other piece of the puzzle.
Oh, that's a great piece. Yeah. Yeah. I, I don't, I, I personally believe my cash flow is better spent, um
mm-hmm.
Putting it back into the business for growth. That's right. But you are a hundred per percent. I mean, of course you're a hundred percent right. This is what you do Al and this is what you do at a high level, Alan.
Yeah. Uh, but yeah, you could use, another great strategy is people who go and they do, yeah. A seven A on real estate. Then whether or not you sell the business, you keep the real [00:34:00] estate and, um, you know, rent back Lease is lease back.
Yeah.
Lease back's the term.
Yeah.
Yeah. You lease back to the new buyer or whatever, and then you hold real estate.
The only time I've thought about that is there was a beautiful piece in downtown Nashville that came up for, for sale. Okay. And it was like 3 million for this really tiny, like, older rundown building. And I was like, oh, this is gonna be beautiful. Like, that'd be awesome. And just, you know, talk about a, um.
A covered land play. Like that's what that would've been like. Just Yeah. Work out in Nashville and, uh, hold that for another 10 years and then, you know, sell to some developer for $30 million.
Right, right.
There's,
but um, a
lot of ways to
do it. There's lots of opportunity once you start opening the book, so
for sure.
Awesome. Any, any last cool businesses that you mentioned or, or have worked with in the, in the past four months?
In the past four months, you know, that's been, it's been a lot of home services businesses, um, and
which are all cool.
Yeah, they're all cool. I like them all. They're all [00:35:00] really cool stories. The sell side is always just so different, but yet.
They have a lot of common traits. Right. Um, but I mean, oh yeah, I've seen that. And then we did a, uh, a manufacturing deal that was specifically for GovCon. It was a veteran buying a business, which I'm always. Ecstatic about, um, yeah, it's a passion thing for me. Uh, but ultimately they were making, you know, drone parts that, it's kind of weird.
The military was using drones where some of the parts were actually outsourced, right? So with, with the current environment, the directives, um, they filled a really nice void and they were able to get some contracts quickly. But, you know, those are, those are big and common. But you know what? Don't forget about the two pays either, man.
There's some weird stuff
out there. Yeah. Don't forget about the two pay. That's my, that's my takeaway for the day.
Yeah.
The, the brick and mortar store toupee shop down the street that, that clears a million dollars that no one thinks of. I,
I'm telling you. Yeah. It's, it's, uh,
I can't imagine that the, uh. I mean, honestly, [00:36:00] from a marketing perspective, that business would be super easy to do.
Yeah. Not only 'cause I could be the model, but, but it's like, it's, it's a visual product. I always get jealous of like these highly visual products. Yeah. Um, but yeah. Awesome. Alan, any last words, uh, for the audience? Anything that you want to, uh, I guess give advice to them?
Yeah.
And if, if not. Where can they find you?
Yeah, absolutely. So, um, I would just say if you guys are listening, anybody's interested in seeing what is possible, even if you're very early in the process and you just wanna, you know, pick my brain or get on the radar, get some guidance about next steps from there to sign LOI, right. Obviously, I'd love to give you my point of view and share real world examples of what to look out for.
Right. Um, and the best way to do that would be through Jack's website on the partners page or uh, just alan FI b.com. You'll get a little landing page, a little stuff about me in the bank, um, but it's your contact info. I'll reach out right away on [00:37:00] social media. I'm just at. Alan Peterson, SBA, um, pretty much on every platform.
That's a LAN, uh, P-T-R-S-O-N-S-B-A. So make sure you say where you found me, right? That matters because for anyone that comes through Jack acquisitions or owned and operated, um, you know, we are doing a reduced deposit and we are, um, getting rid of like some closing costs, which I can get in the weeds on when we talk, but ultimately that's why it's important for that.
I'm just excited for the opportunity and I've got a dedicated team here. Right. So I've got plenty of bandwidth. You never waste my time. That would be, that would be my message, you know?
Yeah. Also, guys, rates are coming down.
Oh, thank
God. Alan is, thank goodness. Yeah, right? Yeah. Yeah. Alan is one of the best in the business.
I'm not just saying that because he is a friend. He real, like I've dealt with a lot of lenders. Alan is one of the best. Give him a call, a or, um, write him a message. A-L-A-N-F-I b.com. Thank you, Alan. Always a pleasure. Yeah, and we'll see you next [00:38:00] time.
