| Most business buyers will use a business loan to buy a business. The amount of the down payment can have a big impact on how salable a business is. Whether a buyer gets a business loan from the seller or a lender, we get a personal financial statement and credit report from the buyer when they make an offer. You need to decide, before you accept the offer, if you want to give the buyer a business loan or if they are likely to be approved by a lender for a business loan. Most sellers would rather have the buyer get a business loan from a lender. The buyer may not be able to get it if the financials of the business are not good enough or the business records do not show good results for the last three years. Seller financing may also be needed if the lease that the buyer will get on the business premises is not as long as the term of the loan. A lender will not make a loan with a longer term than the length of the buyer's lease. Seller financing may be required to make the sale. A loan from the seller is the quickest and easiest way to finance the sale. The buyer normally puts down 40% to 50% and the rest is financed by the seller over 3 to 5 years. The assets of the business are the typical collateral for the loan. As noted above, we get credit information from the buyer for you if this is how the sale will be financed. We can also help the buyer get SBA financing. This is desirable for both parties. You have to finance little or none of the sale. SBA financing allows the buyer to put down a lower down payment, 15% to 20% of the purchase price, and finance the purchase over a longer time, 10 years. The loan can be 20 years if it includes real estate. We are getting businesses pre-qualified for SBA financing. to help sell them. We advertise the low down payment that is required to buy the business. Our Confidential Business Profile helps a buyer get financing by providing a report about the business that they can use when applying for a business loan. This is another service that we provide that increases the chance of a successful sale of your business. |