Plumbing Services Company Receives Support from Merchants Bank of Indiana’s SBA Group

The new year brings hope and excitement for small businesses across the country. For many small business owners, 2022 will provide a chance to start fresh, grow and see continued success. For others, they’ll be left wondering how to recover from 2021 – which, despite economies returning to “normalcy,” was plagued by staffing shortages, rapidly developing COVID variants and more.

As companies attempt to prepare for the unexpected in Q1, a loan from the Small Business Administration (SBA) may be just the solution your business needs to achieve your goals 2022. SBA loans are a viable option for business owners, and interested parties can consider a variety of loans from the SBA team at Merchants Bank of Indiana.

Recently, our SBA group secured a $1.9 million loan for a Better Business Bureau (BBB)-accredited plumbing franchise located in Santa Clara, California. The company provides plumbing services (drain cleaning and repair, sewer inspection and replacements, water heater repairs and more) to residential and commercial customers in the surrounding area.

In 2016, the borrower acquired the location from the seller/original owner of the business. At the subject location, the borrower worked with the seller to purchase the location, but in order to do so, the borrower obtained the seller financing – a seller note in the amount of $2.4 million at an interest rate of 7% for a 10-year term. The note was set to mature on Aug. 1, 2026.

In 2020, the plumbing company experienced dropped revenues due to the pandemic, but witnessed a 2021 year-to-date revenue increase, reflecting that the business was seeing an upward trajectory in profit, but not near to the levels it once was. As the fourth quarter of 2021 approached, the borrower reached out to the SBA Team at Merchants Bank of Indiana requesting funds to refinance the seller note.     

Without the SBA group’s $1.9 million loan, the balloon structure of the seller’s note would drain all the cash from the plumbing company, essentially affecting their day to day working capital needs, and causing a disruption to the overall operations of the business. Especially during the pandemic, the borrower needed excess liquidity in order to help them with the uncertainty in the market.

Providing the company with all of its options, the Merchants SBA group’s loan saved the borrower from instantly draining cash from the business. Due to the loan our SBA team provided, the borrower was able to use that saved money towards current business operations, preparing the business to grow in the new year and recover from the turmoil of the previous ones.

Despite the unpredictability 2022 will surely bring, your small business has options for any financial hardships you may face. For more information about Merchants Bank of Indiana’s SBA loan programs to help your company succeed in the new year, click here.

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