# Sponsor finance

A bank desk that lends senior cash flow debt to funds, sponsors and [searchers](https://searchspheresource.com/glossary/searcher).

The [SBA 7(a)](https://searchspheresource.com/glossary/sba-7a) stops at $5 million of guaranteed loan, and the searcher whose deal needs more senior debt than that is no longer the SBA team's customer at the same bank. The desk that takes the file underwrites the company's cash flow with no government guarantee behind it, and publishes an [EBITDA](https://searchspheresource.com/glossary/ebitda) floor where an SBA desk publishes a loan minimum. It writes for the investor group behind the buyer, so the approach usually runs through those investors. Its terms carry covenants a 7(a) never had, and its floor decides whether the door is open at all.

In numbers: On a company with $3M of EBITDA bought for $15M, a desk that lends 3x EBITDA puts up $9M of senior debt. A 7(a) would have stopped at $5M, so the desk is the difference between the deal closing and the buyer finding $4M more equity.

Source: https://searchspheresource.com/glossary/sponsor-finance
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