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5 Common Methods of Financing your Business Purchase
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Personal Cash & Savings. This is one of the quickest ways to fund your business purchase. Cash, Checking, Savings. Also known as "bootstrapping".
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Friends & Family. Probably one of the most common is personal loans with friends and family when looking to purchase a business. Make sure to take the time to write a business plan and create a legal document(s) highlighting your terms and conditions for the funds you are borrowing to buy a business.
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Local Banks. It is a common misconception that your local bank will fund any business purchase. Banks will look at your credit, your tax returns, the business tax returns, your business plan, your experience at minimum before approving a loan to acquire a business. Though it is a long process, the rates are usually better than hard money or alternative funding sources.
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SBA Lending. The SBA does not lend money, it works with your local bank on your loan. Find out more on our SBA page.
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Seller Held Financing. The most common way of financing your business purchase is having the seller hold a private money note that is secured by the business. Expect to pay higher rates than SBA loans, but the approval process is quicker and more flexible. Though there is no rule of thumb in leverage financing, expect Seller Held Financing to require 50% down on the purchase of a business.
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Need to Finance your Business Purchase? Here are some Books & Guides!
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Request Financing Referral
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Are you looking for financing for your business purchase? We have a referral network to assist you. Just complete the easy form below and we will deliver to one of our referral finance professionals.
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