To help its customers overcome the current difficulty in obtaining traditional bank financing to purchase businesses, Sunbelt Business Brokers has partnered with Pendarvis Capital Group (PCG), a Maryland-based financial group, to provide alternative financing.
Sunbelt, a national business broker, has a Brookfield-based franchise location. The firm specializes in the sale of Main Street type businesses, with deal sizes ranging between $250,000 to more than $5 million.
PCG was created by Ed Pendarvis, who founded the Sunbelt network in 1978, said Ed Krajcir, owner of the Brookfield Sunbelt franchise. Pendarvis is no longer affiliated with Sunbelt, but PCG’s financial services are offered exclusively through Sunbelt, Kracjir said.
“Financing through the banks and credit markets tightened over the fourth quarter,” he said. “We sell businesses and it’s been a challenge.”
PCG has secured funding from an un-named private lending group, Kracjir said. He said Sunbelt is not releasing more information about the lending group at this time. However, PCG is vetting all financing applications, effectively serving as the lender from the customer’s perspective.
“PCG is the group that’s doing the financing from the buyer’s perspective,” Kracjir said. “They have secured the funds with the group.”
The firm is financing deals between $100,000 and $750,000, Kracjir said. The buyer and seller must contribute a 50 percent down payment in total to qualify for PCG financing.
“Over 30 years of selling businesses, Sunbelt has learned that when both parties have skin in the game the business will be more successful,” Kracjir said. “It means both parties can’t walk away and it helps make everyone more motivated.”
Interest rates for the PCG money are higher than traditional bank financing – the company is offering its loans for about 13.95 percent over six years. However, that higher interest rate is more affordable because the money is paid back faster, Krachir said.
“When you talk about a six year term the interest rate is such a small percent because the principal is being paid back,” Kracjir said. “Principal is such a large percentage (of the monthly payment) because it’s being paid back more quickly.”
For more information, visit www.sunbeltmidwest.com.
