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6 Things to Consider for a Purchase of a Small Business

New Business Buyers

6 things to consider for a purchase of a small business

1. Your Own Money - use your own assets, bank accounts, home mortgage, IRA, retirement funds, CD's
mutual funds, and stocks.

2. Seller Financing - a loan set by the seller on a loan term that is fully negotiable between you and the seller. Depending on the purchase amount the seller financing can amount to 30% to 60% of the purchase price.

3. SBA Loans - bank loans guaranteed by the Small Business Administration. (7A loans) help individuals get loans up to $5 million to be able to purchase a business. The application can take up to two months while the bank does it's own investigations on the business's background.

4. Bank Loans - private bank loans can be obtained through setting collateral against your own assets,other than the future revenue of the business your purchasing and it's called a conventional loan.

5. Leverage Buyouts - any size business can be bought by LBO structure as long as it has assets that can be leveraged. These assets can be inventory, real estate, machinery & equipment additionally the financing can be added with other financing.

6. Assumption of Debt - by financing some of the business debt is another option in buying a business. The method can be complicated and getting the original lenders to agree for the new owner to step in and assume the original debt of the business. The lender may need to re-underwrite the terms of the original agreement.

Special thanks to (Marco Terry a managing director of Commercial Capital LLC located in United States & Canada).

8 Comments to 6 Things to Consider for a Purchase of a Small Business:

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Kenneth M. Bonner on Sunday, July 21, 2019 11:46 PM
A right and timely communication mean a stitch in time saves the whole organization. A good leader must not shy from difficult conversations with the staff and the clients For More Information.
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Online Assignments on Tuesday, July 30, 2019 5:08 AM
This article saved me a lot, I was prepared to purchase a small business but after understanding this article I rapidly discovered that the cash flow would not cover my balance service. The article is simple to follow and I am so happy to found it. I would advise who are thinking about buying a small business to take a look at this article.
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