Managing Director – Owner @ Sterling Business Capital LLC | Business Loans, Financial Services
June 9, 2026
One of the most common challenges during a business sale is that owners become focused on the transaction itself rather than the day-to-day operation of the business.
As a result, sales activity may slow, receivables can stretch, inventory purchases get delayed, and working capital becomes tighter. Ironically, this often happens when the business needs to perform at its best because lenders, buyers, and due diligence teams are carefully monitoring results through closing.
We recently worked with a construction-related company that had strong contracts in place, substantial receivables outstanding, inventory commitments, and installation projects underway. The business was healthy, but cash flow timing was becoming a concern as the sale process extended longer than expected.
Because closing was projected to take another 60 to 90 days, we arranged a $600,000 term loan to provide additional working capital and maintain operational stability through closing.
The financing allowed the company to:
- Continue normal operations without interruption • Meet payroll and supplier obligations on time • Maintain customer confidence and project schedules • Preserve financial performance during due diligence • Avoid unnecessary pressure on the transaction
When obtaining financing during an active business sale, several factors are critical:
- The financing structure must be acceptable to the buyer’s lender, particularly in SBA-financed transactions.
- Revenue-based financing and certain short-term products can create challenges because they may not comply with SBA lending requirements.
- Full disclosure is essential. Buyers, lenders, accountants, quality-of-earnings providers, and due diligence teams must all be informed of the new financing.
- Debt schedules, financial statements, and lender documentation must be updated to reflect the transaction accurately.
In most cases, the bridge financing is paid off at closing from sale proceeds. While there is an interest cost to the seller, that cost is often minor compared to the risk of weakening performance, delaying closing, or losing the transaction altogether.
The lesson is simple: if a business needs additional liquidity to maintain momentum during the sale process, there are often financing solutions available. The key is structuring the transaction correctly, communicating transparently with all parties, and ensuring the financing supports — rather than jeopardizes — a successful closing.
— John R. Mitchell President Sterling Business Capital LLC
Helping business owners finance acquisitions, growth, partner buyouts, and successful business transitions.