What Is CapitalPad?
The world of small business acquisitions has traditionally been difficult for individual investors to access. Unless you had deep connections in the private equity world or could write seven-figure checks, the best SMB deals were simply out of reach. CapitalPad is changing that.
CapitalPad is a deal-by-deal private equity platform that connects accredited investors with acquisition entrepreneurs — also known as independent sponsors and self-funded searchers — in the lower middle market. Instead of committing capital to a blind pool fund, investors on CapitalPad evaluate and invest in individual deals, giving them unprecedented transparency and control over their private equity investments.
For acquisition entrepreneurs, CapitalPad provides a streamlined way to raise the equity capital they need to close deals. And for the broader SBA lending ecosystem, CapitalPad represents a powerful new source of equity injection capital that can enable zero-down business acquisitions.
How CapitalPad Works
CapitalPad operates on a straightforward model that benefits both sides of the transaction:
For Acquisition Entrepreneurs (Sponsors)
If you are a self-funded searcher or independent sponsor who has identified a business to acquire, CapitalPad helps you raise the equity capital you need. Here is the typical process:
- Submit your deal. You provide details about the target business, including financials, industry, deal structure, and your background as an operator.
- CapitalPad reviews and lists the opportunity. Their team evaluates the deal and, if it meets their standards, makes it available to their investor network.
- Investors commit capital. Accredited investors on the platform review the deal materials and decide whether to invest. This is done on a deal-by-deal basis — each investment is a separate decision.
- You close the deal. With the equity capital raised, you can close your acquisition alongside SBA financing and any seller notes.
For Investors
CapitalPad offers accredited investors access to private equity-style returns without the traditional fund structure. Key features include:
- No management fees. Unlike traditional PE funds that charge 2% annual management fees on committed capital, CapitalPad does not charge management fees. This means more of your money goes to work in actual investments rather than paying fund overhead.
- 20% profit share. CapitalPad uses a 20% carried interest (profit share) model, which is standard in private equity. You keep 80% of the profits from successful investments.
- Deal-by-deal selection. You choose which deals to invest in. No blind pool commitments, no surprises. You review each opportunity on its own merits.
- Lower middle market focus. CapitalPad focuses on the lower middle market — businesses that are too small for institutional PE but too large for most individual investors to acquire alone.
Why CapitalPad Matters for SBA Deal Structures
For readers of this blog, the most important aspect of CapitalPad is its role in enabling zero-down SBA loan acquisitions. Let us break down exactly how this works.
The Equity Injection Problem
When you buy a business using an SBA 7(a) loan, the lender will finance up to 90% of the total project cost. But they require the remaining 10% to come from non-debt sources — specifically, a combination of equity injection and seller financing.
For most first-time buyers, coming up with 5-10% of a multi-million dollar acquisition in cash is the single biggest barrier to closing a deal. If you are buying a $3 million business, that is $150,000 to $300,000 you need to bring to the table.
How CapitalPad Solves the Equity Gap
CapitalPad’s investor network provides exactly the kind of equity capital that SBA lenders require. Here is how a typical zero-down deal structure works with CapitalPad:
- SBA 7(a) Loan: 90%. Your SBA-preferred lender provides the primary financing. With rates tied to the prime rate and terms up to 10-25 years, SBA loans offer some of the best terms available for business acquisitions.
- Seller Note: 5%. The seller agrees to carry a subordinated note for 5% of the purchase price. Per SBA requirements, this note is placed on full standby for at least 24 months — meaning no payments are due during that period.
- Equity from CapitalPad Investors: 5%. Accredited investors on the CapitalPad platform collectively provide the remaining 5% as equity. In exchange, they receive a minority ownership stake in the acquired business and participate in the upside as the business grows.
The result: you acquire the business with zero personal capital invested. The SBA loan, seller note, and CapitalPad equity combine to cover 100% of the purchase price.
For a complete walkthrough of this strategy, check out our guide: How to Buy a Business with Zero Down Using an SBA Loan.
CapitalPad vs. Traditional Private Equity Funds
To understand why CapitalPad is so appealing, it helps to compare it with traditional private equity:
No Management Fees
Traditional PE funds charge a 2% annual management fee on committed capital. For a $50 million fund, that is $1 million per year going to fund management regardless of performance. CapitalPad eliminates this entirely, meaning investors only pay when deals generate profits.
Deal-by-Deal Transparency
In a traditional blind pool fund, investors commit capital upfront and trust the fund managers to deploy it wisely. With CapitalPad, you see every deal before you invest. You can read the business plan, review the financials, evaluate the operator, and make an informed decision on each opportunity.
Accessibility
Traditional PE funds often have minimum commitments of $250,000 to $1 million or more. CapitalPad’s deal-by-deal model allows accredited investors to participate with smaller individual investments, making private equity more accessible.
Alignment of Interests
The 20% profit share model ensures that CapitalPad only makes money when investors make money. There is no incentive to deploy capital into mediocre deals just to collect management fees — a common criticism of the traditional PE model.
Who Should Use CapitalPad?
Acquisition Entrepreneurs
If you are a self-funded searcher or independent sponsor looking for equity capital to close a deal, CapitalPad is worth exploring. The platform streamlines the fundraising process and connects you with a pool of accredited investors who understand and are actively looking to invest in SMB acquisitions.
Accredited Investors
If you are an accredited investor interested in private equity returns without the blind pool commitment, CapitalPad offers a compelling alternative. The no-management-fee, deal-by-deal model gives you control and transparency that traditional funds cannot match.
SBA Loan Borrowers
If you are working with an SBA lender and need to meet the equity injection requirement, CapitalPad’s investor network can provide the capital you need to close your deal with zero money out of pocket.
Finding CapitalPad on VerSquare
CapitalPad is profiled on VerSquare.com, alongside dozens of other investor firms that support acquisition entrepreneurs. VerSquare is an excellent resource for comparing different equity partners, understanding their investment criteria, and identifying the best fit for your specific deal.
How GoSBA Loans Helps You Put It All Together
Having an equity partner like CapitalPad is essential, but you also need the right SBA lender to make your deal work. That is where GoSBA Loans comes in.
GoSBA Loans is a free service that has helped business buyers access more than $320 million in SBA financing through a network of 50+ SBA-preferred lenders. Here is what GoSBA provides:
- 50+ SBA lenders competing for your deal — more lenders means better rates and terms for you
- A free business plan valued at $2,500 to $5,000 — an SBA requirement that GoSBA provides at no cost
- Expert deal structuring — GoSBA’s team helps you structure your equity injection, seller note, and SBA loan for maximum approval chances
- Completely free — there is zero cost to the borrower
When you combine CapitalPad’s equity investors with GoSBA’s SBA lending expertise, you have a complete financing solution for acquiring a business with no money down.
Ready to Get Started?
If you are an acquisition entrepreneur looking to buy a business using a zero-down SBA loan structure, contact GoSBA Loans today. We will help you navigate the SBA lending process, structure your deal for success, and connect you with the right lenders.
Whether you are raising equity through CapitalPad, working with a family office, or exploring other investor options on VerSquare.com, GoSBA Loans is your partner for SBA financing.
