Financing

Financing the sale of a business is one of the most difficult loans to attain. While economic factors do play a role in the availability of funds, most Buyers are turned away not by the availability of money, but by the method or condition of the books and records of the business they’re trying to buy. In other words, the Seller by not reporting a profit over the last few years has effectively eliminated any chance of the Buyer getting a loan. The lenders simply look at the tax returns of the business to see if the businesses cash flow will support the loan payment.

For the above reason most small businesses will not qualify for traditional financing. Often Sellers are willing to help finance(carry) the sale of their business.

If the business does have enough profit showing on its Tax Returns there are lenders available to make these loans. Most of the time the loans will be guaranteed though the SBA. These loans are typically 7-10 years in length and require a 20-30% down payment. Interest rates usually are between 2-3% over the prime rate. There are other fees involved and they vary by lender

There are a few lenders on the market who may make loans that are not guaranteed by the SBA, but those loans will require a higher down payment and higher interest rates.

Financing the sale of commercial property is easier to attain, but still requires lenders that have an “appetite” for your specific type of property. As an example, Automotive use properties require a more in-depth level of investigation based on possible contamination of the ground. Single use properties are harder to finance then multi tenant use properties. Many lenders have specific requirements on what they will and will not lend on.

We have relationships with many lenders that specialize in the specific business or property you’re interested in. We will help arrange the financing and structure the sale.

BOTTOMLINE BUSINESS BROKERS ADVISES ALL CLIENTS TO SEEK INDEPENDENT LEGAL, TAX, ACCOUNTING, AND OTHER PROFESSIONAL ADVICE PRIOR TO MAKING A PURCHASE DECISION.

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