Key highlights

1. Lisa Forrest isn't just passionate about her work—she's transforming business acquisition for new entrepreneurs. Director of Sponsor Finance / Search Fund Lending at Live Oak Bank, her engagement in Small Business Administration (SBA) is opening massive doors for the next generation's access to small businesses.

2. Lisa is on a fierce mission to educate. With an impressive 36 years of experience in banking and SBA, she assures young entrepreneurs with nuggets of insight, such as high-interest rates will not end acquisition, and the counter-cyclical nature of the SBA ensures consistent support for self-funded business acquirers.

3. With her extensive industry experience, mentorship comes naturally to Lisa. She wholeheartedly advises young entrepreneurs to prioritize maintaining meaningful, face-to-face relationships throughout their entrepreneurial journey. She encourages mid-career professionals to recognize and leverage their invaluable experience and skills as beneficial assets in their pursuit of success.

Engaging Young Entrepreneurs

Lisa Forrest is steadfastly transfiguring business ownership for a booming and progressively impactful group—aspiring young entrepreneurs. Director of Sponsor Finance / Search Fund Lending at Live Oak Bank, the number one Small Business Administration (SBA) lender in the U.S., and a powerhouse of educational support, Lisa is using her decades’ worth of banking experience to help the next generation of leaders climb up the steep learning curve of entrepreneurship.

Having devoted a significant amount of time to the SBA niche and cherishing every second of it, Lisa ensures a smooth transition for the inevitable and steadily approaching intergenerational transfer of businesses. Her commitment generously extends beyond business financing to equip youth with useful resources and the necessary knowledge.

“Any chance I can get when I'm invited to speak to our next generation of entrepreneurs, I jump at, especially to get the word out to as many people and as diverse a community. This idea of acquiring a company can sound daunting, and I know that some communities don't even get the chance to hear about it.”

Funding Assistance through SBA Loans

Lisa describes two paths to which the search fund process can branch out, the traditionally funded and self-funded search. Traditionally funded searching is typically backed by investors and advisors, who give talented but inexperienced recent MBA graduates a chance to acquire, manage, grow, and sell a small to medium-sized business while receiving mentorship. Self-funded searching is a bit more independent, with searchers treading the same plane without the assistance of investors and advisors, and programs like the SBA become critical to securing funding.

SBA loans play in the approaching wave of younger entrepreneurs and their access to capital to acquire a business successfully. By guaranteeing a portion of a bank's loan, the SBA incentivizes lenders to offer more favorable loans to borrowers. This typically involves a lower down payment requirement and a longer repayment term, allowing the borrower to afford a larger loan. Additionally, the SBA's guarantee reduces the lender's need for extensive outside collateral, providing further support and security for the borrower in obtaining the loan. This means that the SBA's involvement encourages lending institutions to offer more accommodating loan terms and increase access to financing for small business owners.

Lisa explains that while the self-funded search process is a bit more hands-on, nobody is entirely alone. Investors are bridging the equity gap in the SBA space, working to integrate the rules and regulations of the SBA into their assistance. The self-funded search ecosystem is also taking cues from the traditionally funded space, with an increase in advisory boards, advisors, and capable operators delving into the SBA space.

“SBA is trying to open up the funnel even more for our next generation of entrepreneurs. They've changed the rules so that you still need 10% down on the total project cost, but now the buyer's equity can be as low as 2.5%.”

These softened rules will create more definite availability for acquirers to obtain companies, and those who have not yet had enough personal resources or liquidity can augment their ability to purchase a company. Lisa notes that arrangements can exist where an acquirer can own 50-60% of a business, and three or four co-investors can hold less than 20% of a company to stay below the threshold to avoid personal guarantees and bridge the equity gap.

A Virtuous Cycle

If the duration of her work hasn’t illustrated it enough, Lisa is extremely passionate about changing people’s lives and bolstering the economy at its core. She finds immense satisfaction knowing that her work keeps small businesses running when their families don’t want to take over and supports employees' livelihoods. Her searchers have a unique opportunity to preserve the roots of businesses and cultivate growth under their management.

“It sounds a little hokey, but we’re really financing people's dreams, and financing the next generation of entrepreneurs is a really rewarding thing I do for a living. Most of the economy and people are employed by small business owners.”

It's nothing short of the dream career. And not only that, Lisa addresses the gigantic risk of having a business's success decide the future of its business owner. However, SBA loans can unlock a guaranteed retirement and the freedom to pursue post-retirement endeavours confidently.

Lisa is certain the SBA's future is strong, and its true impact is just beginning to unfold. Even with prevailing economic trends, she asserts that the SBA is counter-cyclical, which means its performance or success remains unaffected by fluctuations in the broader economy. She assures new entrepreneurs about the seemingly dire economic state:

“Our acquirers are paying 10.5, maybe upwards of 11% interest. And I know it seems astronomical for folks that are new to this idea and are younger in their careers. For those of us who have been around for a little bit, 8 to 10 to 11% interest rate is actually more stabilized.”

There are plenty of runways for the model’s success—and for the next generation’s feet.

Business Acquisition Advice

Financing business acquisitions for three decades has given Lisa some big-picture insight into the world, which she happily passes on to the new entrepreneurs and mid-career professionals who have been bitten by the acquisition bug.

For new professionals, she suggests remaining authentic, staying ambitious and enthusiastic, and maintaining relationships beyond the screen despite the growing omnipotence of social media. She recommends phone calls instead of emails, getting out and physically visiting sellers, investors, and potential networks, and maintaining strong personal connections. She enforces that ebbs and flows will continue to persist, but now is a great time to be an acquirer.

For mid-career searchers, Lisa advises seeing previous experience as an asset. Their résumé and personal financial statements give them an indisputable advantage, and if they wish to pursue exciting new adventures after leaving the corporate hive, there is nothing stopping them.

“I am so excited for the next generation of entrepreneurs that are inserting themselves into this circle at this stage of the game. So good luck to everybody.”

Conclusion

Lisa Forrest, the esteemed Director of Sponsor Finance / Search Fund Lending at Live Oak Bank, emerges as a true champion and ally for the rising generation of entrepreneurs. With an illustrious career spanning 36 years in the banking industry, Lisa utilizes her wealth of experience to empower young business owners and reshape the landscape of business ownership. Recognizing the pivotal role of SBA loans, Lisa is educating self-funded searchers on their significance in enabling the entrepreneurial youth to secure the necessary capital for successful acquisitions. Her commitment to financing dreams and supporting the next generation of entrepreneurs is not just a job—it is her passion. Knowledgeable, supportive, and driven, she is an inspiring role model for aspiring business owners and a powerful force in strengthening the backbone of the economy.

Live Oak Bank assists traditional searchers, responsible sponsors, and self-funded searchers. Lisa organizes office hours every Wednesday at 8 AM Pacific Standard Time to educate curious newcomers on the vibrant world of self-funded searching.