How to Use an SBA Loan to Buy a Tile & Stone Installation Business

Source acquisition targets through specialty trade business brokers, M&A advisors with construction industry experience, or direct outreach to tile contractors in your target market. Evaluate whether the business meets minimum acquisition criteria: $300K–$500K EBITDA, diversified contractor relationships, experienced crew leads willing to stay post-sale, and documented project management processes. Request a Confidential Information Memorandum and review three years of tax returns, P&L statements, and job cost reports before signing an LOI.

Negotiate and execute a non-binding LOI that outlines the purchase price, deal structure, and key terms including any earnout provisions tied to customer or revenue retention. For tile businesses with customer concentration risk — where one or two GCs represent a large share of revenue — consider structuring 15–25% of the purchase price as an earnout tied to 12–18 months of post-close EBITDA performance. Confirm the seller's willingness to carry a 5–10% seller note on standby and participate in a 12–24 month transition period.

Approach SBA Preferred Lender Program (PLP) lenders who have experience financing specialty trade contractor acquisitions. Provide the lender with the LOI, three years of business tax returns, personal financial statements, a personal tax return history, and a business plan that addresses your operational background and post-acquisition growth strategy. Lenders will scrutinize labor dependency risk, customer concentration, and license transferability, so prepare clear documentation on crew lead retention plans and contractor relationship continuity.

Conduct thorough due diligence with the support of a CPA experienced in construction accounting and a construction-focused M&A attorney. Review the crew roster distinguishing W-2 employees from 1099 subcontractors, assess workers compensation claim history, verify all state contractor licenses and bonds are current and transferable, and perform a line-by-line backlog analysis including signed contracts, deposit status, and estimated gross margins by job type. Identify any deferred equipment maintenance, aging vehicle needs, or open mechanic's liens that could affect post-close cash flow.

Submit the full SBA loan package to your lender including the executed purchase agreement, business valuation or independent appraisal, equipment appraisal, real estate appraisal if applicable, environmental assessment if required, and all business and personal financial documentation. The SBA will require a business valuation for any acquisition where goodwill exceeds $250K. Budget $3K–$7K for third-party appraisal and valuation fees. Respond promptly to lender requests for additional documentation to avoid delays.

Upon SBA authorization, work with your attorney and the lender's closing team to finalize all closing conditions. Key closing requirements for tile business acquisitions typically include executed employment agreements for key crew leads and foremen, confirmation that contractor licenses and insurance policies have been transferred or reissued in the buyer's name, proof that bonding capacity has been established, and confirmation that the seller note is properly subordinated. Coordinate with the seller on a customer and crew communication plan to be executed immediately after closing.

Execute the asset purchase agreement, fund the SBA loan, and transfer ownership. Initiate a structured 12–24 month seller transition that prioritizes personal introductions to key general contractors and developers, joint participation in project estimating and client meetings, and knowledge transfer of informal pricing and relationship management practices. Retain the seller in a paid consulting or part-time estimating role through the first full project cycle to protect revenue continuity and crew confidence.