Financing a business purchase

One of the biggest advantages of utilizing the services of a business brokerage is often not even considered during the initial euphoria of having found just the right business for you.

That advantage? Using the broker’s expertise and lending relationships to help you find the best source of funds to complete the purchase.

Seldom do we find buyers naïve enough to think they can complete a transaction without having some of their own skin in the game. Cash in on most deals from the buyer will range from a bare minimum of 5% to a more likely amount of 10-25% of the total selling price. The 5% figure is as rare as snow on Miami Beach.

Your down payment will be impacted by a variety of factors including pertinent experience you might have in the target industry, your credit score and your personal financial statement. The business category you are considering also will impact lenders’ excitement or reluctance to consider a loan. Is the industry in decline or ascending to new, more profitable heights?

Your business broker will have quizzed you on what your source of funds will be? If you have the cash on hand, or in readily available investments, to complete the purchase, good for you. Or you may be in an enviable position to borrow from a friend or relative or other business acquaintance thus avoiding the necessity of obtaining the balance of the purchase price from an unrelated third party lender.

Once your broker understands your financial limits, he or she will go to work helping you put a loan package together to present to lenders. Certain lenders will fall all over themselves to make loans to certain industry segments (think doctors), but most lenders are selective as to what kinds of businesses they will consider financing. One lender may specialize in restaurants; other in manufacturing and distribution, another in transportation related companies. Your broker will help you navigate those waters to get your loan request in front of the right lenders.

If you're ready to get started as an entrepreneur and find your business, check our our latest listings.

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