Human Connection and Strategic Clarity in Mexico City

This past week, I had the privilege of meeting with the Pioneer Capital Advisory team in person for our company’s first strategy and team-building summit in Mexico City. While so much of business in 2025 is conducted virtually, there is something irreplaceable about being in the same room with the people you work alongside every day.

Whether it was mapping out process improvements, debating how to scale sustainably, or simply sharing a meal together, the experience reinforced a truth that often gets lost in the rush of remote work: relationships are strengthened when people gather face to face. Breaking bread with colleagues builds trust. Listening in person creates alignment that no Zoom call can replicate.

It was a reminder that behind every SBA transaction we support - every lender deck, term sheet, and closing checklist - is a team of real professionals committed to helping buyers navigate complex decisions with speed and clarity.

​

Deal Volume Holds Steady Amid Policy Changes

Despite the SBA’s updated guidance now in effect, acquisition momentum remains strong. At Pioneer Capital Advisory, we are facilitating three SBA-financed closings this week:

✔️ A multi-location auto repair facility

✔️ A regional asphalt striping company

✔️ A niche equipment provider

The message from the market is clear: for qualified buyers with well-structured deals, capital is still flowing. We continue to see robust activity in the SMB acquisition space, particularly among buyers who are willing to prepare thoughtfully and act decisively.

For those evaluating larger targets, parri passu financing is becoming an increasingly relevant path to explore.

Parri Passu Financing: What Business Buyers Should Know

One of the more sophisticated tools in SBA lending, parri passu financing enables a buyer to pursue transactions above the $5 million SBA cap by combining an SBA 7a loan with a conventional loan from the same bank.

In this edition, we examine how the structure works, when it’s appropriate, how banks underwrite it, and why it’s often a sign of higher-quality acquisition targets.

What Is Parri Passu Financing?

Parri passu, Latin for “on equal footing”, describes a capital stack in which a bank issues both an SBA 7a loan and a conventional loan for the same transaction. The SBA portion is backed by a 75% government guaranty. The conventional loan is not.

Used primarily for acquisitions exceeding the $5 million SBA limit, this structure allows buyers to secure the necessary capital from a single lending partner without needing mezzanine financing or additional bank syndication.

What Makes These Deals Stand Out

One element I personally appreciate about deals in the parri passu space is that they often involve more transitional businesses. These companies tend to come with a built-out management team, operational processes, and infrastructure that reduce key-person risk.

This is a meaningful contrast to smaller acquisitions -say, those generating around $250,000 in annual earnings - where the seller is often the linchpin of the business. In those situations, the buyer is essentially purchasing a job.

When I meet with prospective clients, I always encourage them to consider the human capital infrastructure of the business. Is the seller the primary sales driver? Or is there a competent team in place that can continue delivering results post-close? That distinction often determines whether the business is truly investable—or merely transitional in name only.

When Should a Buyer Consider This Strategy?

Parri passu financing is well-suited to experienced and well-capitalized buyers. Ideal candidates generally meet the following criteria:

• Post-closing liquidity of at least $100,000 in cash or taxable brokerage accounts
• A credit score in the 700s or higher
• Proven experience managing teams and overseeing a profit and loss statement
• A target business with debt service coverage of at least 1.65 times (based on SBA and seller debt)
• The ability to contribute 10 percent or more of the total project costs
• Operational and leadership capacity appropriate for the scale of the business being acquired

This is not a fit-and-fill structure. Lenders are highly selective, and sponsor readiness matters.

What Are Banks Looking for?

Because the conventional portion of the loan is not guaranteed, banks approach these deals with heightened caution. Underwriting is often more conservative than with standalone SBA loans. Sponsor liquidity, managerial background, and deal fundamentals are all closely examined.

Lenders also want to see a compelling narrative: a strong buyer matched with a stable, cash-flowing business and a clear path to continuity.

What Size Deals Can Be Financed?

Lenders vary in how much conventional financing they are willing to pair with the SBA portion. Some will add $1 million over the SBA limit, others will stretch as far as $4 million. That opens the door to financing packages of up to $9 million within a single banking relationship.

This structure provides flexibility for buyers looking to scale up without bringing in external equity or cobbling together multiple sources of debt.

How Many Lenders Offer This?

Pioneer Capital Advisory works with eight banks nationwide that currently offer parri passu financing. Each institution has its own risk tolerances and sponsor preferences. Some place more weight on the buyer’s financial profile; others emphasize the strength of the business being acquired.

That is why we advise buyers to engage with us early—ideally before issuing an IOI or LOI—so we can match them with the right lender and structure the deal for success from the outset.

Let’s Talk

If you are exploring a larger acquisition and want to assess whether parri passu financing may be appropriate, I would welcome the chance to connect. We can advise on lender alignment, capital stack structure, and underwriting readiness.

Reach me directly at matthias@pioneercap.com.

Disclaimer: The information in this newsletter is for informational purposes only and should not be considered legal or financial advice. Business buyers are encouraged to consult with their legal counsel and accountant to ensure the proper structuring of their transactions and to fully understand the tax implications of seller financing.

Thanks for reading! Feel free to reply directly to this email with any questions or thoughts.