Finance Your Holiday Lighting Installation Acquisition with an SBA Loan

Before approaching sellers or brokers, establish your target profile: holiday lighting businesses with $500K–$3M in revenue, 20%+ EBITDA margins, company-owned light inventory, and 70%+ customer re-sign rates. Get pre-qualified with an SBA-preferred lender by submitting 3 years of personal tax returns, a personal financial statement, and a brief acquisition business plan. Pre-qualification signals to sellers and brokers that you are a serious, financeable buyer and gives you a realistic ceiling on deal size.

Work with business brokers specializing in home services or use direct outreach to holiday lighting operators in your target market. Request 3 years of tax returns, profit and loss statements, and a customer list with annual revenue per account and re-sign history. Pay close attention to whether the business owns its light inventory (a major value driver) or relies on customer-owned lights (a red flag for recurring revenue quality). Normalize EBITDA by adding back owner compensation, personal expenses, and one-time costs to arrive at a true earnings baseline for SBA underwriting.

Once you identify a target, submit a non-binding letter of intent (LOI) specifying the purchase price, structure (asset purchase is standard), earnout terms if any, and the expected SBA financing contingency. For holiday lighting acquisitions, include a request for a 30–60 day exclusivity period to complete due diligence before the upcoming season, since timing relative to the October–January install window will affect both seller urgency and lender timelines. Negotiate a seller note of 5–10% of the purchase price to partially satisfy your equity injection and demonstrate seller confidence to the lender.

Engage a CPA to verify 3 years of tax returns against P&L statements and reconcile any owner add-backs. Physically audit all company-owned light inventory, clips, extension cords, storage bins, vehicles, and lifts — confirm condition, quantity, and book value against any depreciation schedules. Pull customer-level data to validate re-sign rates, revenue concentration among top accounts, and whether formal contracts or service agreements are in place. Interview key employees and crew leads to assess retention risk. SBA lenders will ask for all of this documentation, so thorough due diligence now accelerates underwriting later.

Select an SBA Preferred Lending Partner (PLP) with experience in home services or seasonal business acquisitions — PLP status means the lender can approve loans in-house without routing to the SBA, dramatically reducing closing timelines. Submit the full loan package including the purchase agreement, business valuation (required for deals over $250K), 3 years of business tax returns, buyer financial statements, a business plan with cash flow projections showing how the seasonal revenue pattern services the debt, and documentation of all assets being acquired. The lender will order an independent business appraisal if one is not already provided.

The lender's underwriting team will analyze the business's debt service coverage ratio (DSCR) — SBA lenders typically require a minimum 1.25x DSCR on an annualized basis, meaning the business must generate $1.25 in EBITDA for every $1.00 of annual debt service. For seasonal businesses, be prepared to explain monthly cash flow timing with a detailed 12-month projection. Upon conditional approval, you will receive a commitment letter outlining loan terms, collateral requirements, and any conditions to closing. Work with a business transaction attorney to finalize the asset purchase agreement, bill of sale, and any seller consulting or non-compete agreements before the closing date.