Most buyers focus on finding the right business. The best buyers focus on finding the right financing.
In this episode of Jackquisitions, Jack sits down with SBA lending expert Alan Peterson to break down a major new SBA initiative that's creating opportunities for acquisition entrepreneurs—especially those looking at manufacturing businesses.
They discuss the new Made in America lending program, how increased SBA guarantees actually impact buyers, and why banks still won't finance bad deals no matter how much government support exists. The conversation also dives into the realities of buying manufacturing businesses, the risks hidden inside supply chains, and why cash flow remains king whether you're buying a contractor, manufacturer, or construction company.
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In This Episode, We Cover:
→ The new SBA Made in America program and who qualifies
→ Why manufacturing acquisitions are getting increased attention from lenders
→ How a 90% SBA guarantee changes the bank's risk profile
→ Whether higher guarantees actually help buyers win deals
→ Why banks still won't finance bad acquisitions
→ How buyers can use SBA financing to pursue larger opportunities
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Follow Jack for More Acquisition Insights
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💼 Special Thanks to First Internet Bank
Looking to buy or grow a business?
First Internet Bank is a National Preferred SBA lender focused on skilled trades acquisitions. Get up to 90% financing for acquisitions, partner buyouts, and commercial real estate—plus optional lines of credit for growth.
They take a "how can we" approach, helping both first-time buyers and experienced operators get deals done.
👉 Special Offer: Mention Owned and Operated for a reduced good faith deposit, plus a free deal review and buyside prequalification.
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We are never gonna do a bad deal just because we have the increased guarantee, and that's a misconception as well. The buyer still needs a good deal, and if the bank's not gonna lend on the bad deal or and and you really don't want the bank lending on the bad deal if you're the buyer in general. I take I know right don't go SBA for any kind of construction. Where are they getting the raw material from? How frequently are they getting it in? How much inventory are they holding and why? But you know it better than I do. I'm I'm a W-2 fanboy. You're in the you're in the arena, right? Like varieties are gonna pay you when they want to pay you. And know what you're gonna do? You're gonna sit around and you're gonna wait. That's what you're gonna do. You're not gonna go sue them. By the way, they're your best customer. So those are the same challenges in manufacturing, Jack, in my opinion.
Welcome back to Jack Quisicians. Today we have Alan Peterson. Alan, what's going on, man? Hey Jack, great to be back with you. Um, all is well here in beautiful Tampa, Florida, staying busy. Uh, how about yourself? What's new and exciting? Dude, doing amazing. We love summer season in HVAC. Surprise, surprise. How has the SBA market been? How's uh what what's the state of the economy? That I feel like that's how I've been uh uh seeing how if we're in a recession or not is how you respond to this question is like I ask it every month to two months. Yeah, yeah. No, I mean right now, Jack, um, we are seeing a lot of folks pursuing uh the like manufacturing adjacent businesses right now. Now, I would still say home services remains um the hottest that I'm seeing a lot of. There's still a lot of activity there, a lot of interest there. Close second, though, is gonna be manufacturing. And I think that that's always sort of been the case. Uh, but now with the like the Made in America program, uh, it's certainly that it's certainly increased things. You know what I mean? Um, it's it's pretty interesting. Uh I you know, if anyone's not familiar with that,
essentially, Jack, it treats it treats it, it treats it like an ITL loan, an international trade loan. I know I'm speaking, I'm speaking Greek here, I'm speaking jargon, I don't mean to. Essentially, what that is, it's it's a loan where the guarantee, so typically on a 7A loan, Jack, if we make a loan for a million dollars, the bank is insured by the SBA to 75% of that loan. So we're really only naked, if you will, 250. The uh ITL international trade loans, which are for people that are exporting you know goods and services out of the country, uh, those folks are getting a 90% guarantee. So with the Made in America program, right, manufacturing every subset of it, okay, is now able to get that 90% guarantee. And there's also another program that I haven't seen as much action on currently, but it's anything that has to do with the supply chain as it relates to food. So grocery chains, you know, grocery manufacturers already included, but even like transport, logistics, wholesalers, anything that has to do with that, because it's an effort to spur domestic production and obviously reduce grocery store costs because you know I went shopping to at Publix because I'm in Florida and that's what you do. Uh you go to Publix for better, for worse. And dude, meat's expensive. Meat's expensive. And uh it is what it is, but I should just buy a cow and get a freezer, like my smart friends tell me to do. But the reality is we're trying to spur that up. That's the mission of the SBA Jack. And it's been good. It's been good. The bigger guarantee helps us out a lot. If you're buying a business, financing can make or break a deal, which is why I work with Alan Peterson from First Internet Bank. Not only is he a good friend, but he is the best in the business. He's closed over 90 million in SBA loans, specifically in the skilled trades and manufacturing industries in the last year alone. He's the kind of banker that works with how to get this done, not if it can get done. Hit the link in the description below to get a good faith deposit plus a free deal review. He also does pre-buyer qualifications as well. Click it. Alan Peterson, first internet bank. And so, I mean, from the banking side, I'm always interested in this because there's lots of programs out there that the government rolls out, and banks are supposed to, it's supposed to incentivize banks to lend for whatever reason. And a lot of times it just actually doesn't work, right? The internal policies override whatever the guarantee the government was going to offer, and there's still like we see a lot in the USDA and FDA loans and like that whole region. Oh, yeah. Like it's it's really bad outside of like real certain vendors or certain banks. Um, that being said, so has have you seen a large uh tick up of manufacturing movement then from this? Yeah, I mean, ultimately, I we really have. And to your point, right? Like I've been party to USDA lending previously on their PI program. It's uh commercial loans that are within set geography geographic footprints, which are really limited, they're changing. It's a really inundated process. Great initiatives. There's some folks that do it really, really well, but it's certainly more complicated. I feel like the government, Jack, to spur the activity they're looking for to get that outcome, they're rightfully incentivizing the banks by greatly reducing the risk, right? Think about a $5 million opportunity where you know they're they're they're they're protected, you know, for 4.5 million of it is safe, right? In a worst-case environment. And that's significant. Um, and it's great too. I mean, it's it's the Made American manufacturing, to be clear, it's anyone with an A N A I C S code. So that's obviously, or excuse me, not obviously, but you people might your listeners might not know. That's the industry code, right? So if you're an acquisition entrepreneur, you're looking at a target business, look at the business tax returns, the upper left, you'll see the NAICS. So that's your industry code. So anything 31 through 33, you're eligible. So those are the first two digits of that six-digit code. You're automatically in there. Um, and that's going to be the same thing as the as the ITL, where yeah, banks want to make those loans, Jack, because we portfolio a lot of our loans. That's why we're able to offer more attractive pricing uh than previously, which has been really good for our group. Um, but ultimately when you sell on the secondary market, right, which some banks do, you can sell the guaranteed portion to the secondary market. So people that buy the secured loans are debt funds, typically they're in retirement accounts. It's similar to bond holdings. I'm really getting way off topic. Um, but the the the reality is you make a lot more money selling 90% of a loan than you do at 75. So the bank is financially incentivized to find a way to say yes.
That being said, we are never going to do a bad deal just because we have the increased guarantee. And that's a misconception as well. Uh, I talked to a gentleman, yeah Jack, I saw a deal, and I know I know you love getting in the weeds and on business period. Bros, three years declining revenue while margins were shrinking. So they're making less top line and somehow squeezing less from the fruit every year. And the the gentleman I was speaking with, really shocked guy, you know, but he's like, but Al, you know, it's 90% guarantee. I'm like, yeah, dude, like, okay, you know, like, yeah, and that that was gonna be my question. That that was actually that was actually my next question was in regards to that is yeah, so now they incentivize the bank to uh maybe take a little bit more risk than they normally would. Definitely but in terms of how does that how does that help out the buyer? And the the answer is not really. Right. Right? Because in in my my thought process would be that the buyer still needs a good deal, and if the bank's not going to lend on a bad deal, or and and you really don't want the bank lending on a bad deal if you're the buyer in general. Take, like take I know, right? Take like you chasing clicks, you guys want to be in the same on the same page is like, hey, if the bank, if you win, the bank wins. If the bank wins, you've won. So yeah, um, so I mean, I wouldn't say that it it's kind of revolutionary in in helping out the buyer. That being said, it might move the needle one or two clicks from where um traditionally might have been a slightly more risky deal for a very good um for a very good buyer profile. That's what it is. So it's a deal where if the buyer would typically be a little bit lighter, right? You know, when we're looking at the the the whole big picture, if we're just not sure, right? That 90 that 90% is gonna likely you know contribute a little bit some in the decisioning. Um the reality though is you're still gonna need transferable experience, right? You're still gonna need adequate cash flow to service the debt. Those two things are non-negotiable. We're not gonna do a deal for someone with a five twenty FICO, right? It's just you it's you still have to be in the conversation. Honestly, it might help you punch upwards a little bit. It'd probably help folks pursue maybe a little bit larger deals, but they're already fundamentally financeable folks. That's my real take on it. But yeah, you're absolutely right. I was just using you, it's better for the bank than it is for anybody else. And I'm I'm guessing though, you still need that 10% of the entire thing down as well. So, like that that's a big portion of this is making sure that that that that 90% coverage is of the loan, you would still need 10% of the entire purchase price. Come coming in and 5% obviously can still be a seller note, uh, so long as it's on standby for the life of the loan. That doesn't mean 10 years. Um, it means that when the loan is paid off or refinanced, the the seller notes do. That's an important, that's an important detail, honestly. Um, because it when you understand that it makes it more palatable to a seller when you can explain that to them. Or if you're already if you're already in the fight, you can do it zeroed out through expansion financing. But if you're a true first-time buyer, the folks that I typically work with, right? 70% of the folks I work with are probably first-time buyers, I'd say. Um, yeah, you're gonna need 10 we're we're we're gonna need 10% coming in one way or the other. Could be investors if you're lucky enough to have a rich uncle, you know, that that we can talk about that. There's always a way. I've got a rich uncle, but he won't lend me any money. That's challenging for me. Uh, but I'm working through that pain. Jack, thanks for bringing that up. Yeah, I think you brought that up.
Um in terms of in terms of like manufacturing businesses in general, Alan. What what's your take on them? I mean, I I work so often in the home services side that like I really just don't have a good grip on manufacturing. Do you like these businesses? You don't like these businesses? What do they look like? We like them. I mean, I I would say that in my experience, the banks like them. At my previous, my previous institution I was with, the chief trend officer liked them because and I quote, they're making real stuff, right? They they're they're making widgets. There's something that you can hold. They can explain it, they can they can look at it and understand the dynamics of supply, right? And essentially the story is not open to as much interpretation. Okay, maybe that's a good way to put it. Yeah, for that reason, the banks like it. It's not as subjective um in that, depending on what they do, obviously. I mean, Jack, I I I thought it was I was telling you a little bit offline. I was on a panel uh at an event that focused on veterans learning how to buy small businesses. And uh, there's a lot of great service members that get out and that would be great entrepreneurs, but they don't realize the access to capital that's there. And at that event, a gentleman in PE told me, he's like, dude, you know, you know what the hot ticket is? He's like, find a bit where his group is buying now, where they're trying to buy lower manufacturing with any gov connection, because he's like, Do you realize those drones we're using to bomb other countries? We're buying from other countries. I'm like, Well, this is kind of a weird, you know, uh it's a cocktail hour, buddy. Relax. But honestly, it was it was uh it was interesting, right? Uh but yeah, again, making real stuff. Banks do like it for that reason. Yeah, and I mean, there's a bunch of to unpack there if we had ours. Um, I mean, also manufacturing in for government contracts as a government, a veteran-owned business is one of those uh protected like subsect classes that actually gets um some great access. Unfortunately, I'm not uh women-owned, veteran-owned, small, you know, I don't meet any of these subclasses, so I never went into manufacturing because I was like, damn, I don't get any benefits from it. Uh, but always an interesting thing. So it let me let me ask you this, and I'm not trying to talk anybody out of manufacturing. I think it's a wonderful industry, but yeah, we always say, not we, but like our a lot of our people in our group always talk about don't go SBA for any kind of construction. And the reason behind that is because um you're paying debt on something that's project-based that doesn't necessarily run linear, you know, like there's no cyclical nature, or there is sometimes a cyclical nature to it, which causes multiple months of not being able to pay and uh hard long cash cycles. Do you see any of those kind of same issues in manufacturing where maybe somebody's on like a 90-day or a 60-day um you know AR, AP? Yeah, I mean I think AR. I yeah, what what the the reality is with that is what we've seen is this is where they're very vulnerable, right? The the total supply chain picture at large. Where are they getting the raw material from? How frequently are they getting it in? How much inventory are they holding and why? Is that sufficient, right? Those are the kind of things we get into because the reality is if they have you know just two vendors and one of the vendors is overseas and there's uncertainty there, whether it be geopolitical or otherwise, what's gonna happen, right? Like, great, like, yeah, it's predictable in that we turn this into this, and it, you know, you think about the cartoon of like the like the factory wheels turning, but there's there's a lot more to it than that. That's a place where they get jammed up. And yeah, to your point, customers, when they're on net 60 terms and it turns into net 90, you're in trouble. And but the that's the same for construction, man. I mean, that's why I love Resi. You know, to get back to the the skilled trades, which is what I really love doing, you know, that you know it better than I do. I'm I'm a W-2 fanboy. You're in the you're in the arena, right? Like, you know how it is, though. When you're doing a big project-based work, like I talked to a guy and he's excavating essentially, he's excavating lines so a big provider can run fiber optics. Okay, cool, cool, good gig, right? Here's the problem uh there's a big communications company that starts with a V and ends with uh Horizon that is that is late paying, allegedly. Yeah, speaking of cease and assist, brother, we're on a heater. By last episode, we we got into a little jam too. So it's trouble. Anything for the audience. I love all the folks I talked to near at Irving are cool, so I'm not worried about it. Anyway, and my boss who listens. Anyway, this unnamed um this unnamed massive company is paying them later than they thought, right? Maybe it's my guy who got it confused, maybe whatever. It doesn't matter. The point is, Verizon's gonna pay you when they want to pay you. And know what you're gonna do? You're gonna sit around and you're gonna wait. That's what you're gonna do. You're not gonna go sue them. By the way, they're your best customers. So those are the same challenges in manufacturing, Jack, in my opinion. And and that's I mean, that story has been multiplied a thousand times with any big vendor. I've heard it from all the Fortune 500 vendors. So, like that that's not not crazy to to picture or here. And so it's just one of those things why I I always I'm always very careful with um debt. It's just understanding, like, hey, well, how do you get paid? When do you get paid? And how do you cover that debt service every month? Because it is a monthly cost, and you need to make sure you can cover it. So uh super interesting. I love that manufacturing loan. That that sounds awesome. I mean, it doesn't seem like it does any particular uh not any huge benefit for the buyer other than potentially allowing you to buy slightly bigger deals than maybe you would be able to prior, and um maybe giving the bank a little bit more incentive to lend um to someone who might be on the line. So very cool. Uh interesting. I I do like when they the SBA or when the government is actually pushing the SBA. So I'm not complaining about any kind of move towards helping buyers get into the game, facilitating business, making the banks win, making the the uh buyers win, making and therefore making something. They had to do something. Jack, you know, my world was nothing but bad. Every update I got wasn't was not exactly good news for the last uh year and a half to two years. So we'll take what we can get, you know what I'm saying? It's been wild west in the SBA recently. So I'm excited to get some some good news, and uh I think there's still some more to come. So hey Alan, awesome having you back.
If you guys have any potential deals you want to pre-qualify to potentially buy a deal, you're starting out on your journey, or you you were doing an expansion loan, a 0% down expansion loan, which is a thing if you already own a business, give Alan a call. Uh, I think we have the website Alan F I B, which will be linked below to go directly to his calendarly, which will allow you to book something. Alan, if people just want to follow you to get SBA updates and hear about your your rich uncle who won't lend you any money, where can they find you? Absolutely. Uh anywhere find social media is sold, I'm at at Alan Peterson S B A, A-L-A-N-P-E-T-R-S-O-N, S B A. Uh Alan F I B is the best way, though, because when you come on my calendar that way to have a quick intro call and for us to talk about what you're looking to do, maybe you need a buyer pre-qualification letter. That is your hunting license. It lets the sellers know you're serious, you're financeable, you can take a deal down. I will tell you how much money you can actually borrow and what businesses you should look at. When you come through Jackquisitions or the own and operated universe, I am able to lower uh the deposit fee. And there's some other incentives as far as packaging fees, et cetera. Um, just as a good faith partnership for what we've been able to kind of work on together here. So AllenFib.com or at AllenPeterson SBA. Uh, please don't cyberbully me. I am delicate. So thank you so much for having me on, Jack. I hope I can come on again soon. I appreciate it. Thanks, guys.
