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    2 Replies Latest reply on May 27, 2009 3:32 PM by billyensign

    Financing with minimum assets

    billyensign Newbie

      I wish I could do this more than anyhing , I have a unique oppurtunity to purchase a 30 yr old 1 mil franchise for $375k which will include $85 operating cash, the owner will take $75k on paper. I have 2 properties value of $750k minus $125k mortgage minus $150k line of credit= $475k

      What are my options for financing?

      Thank you,
        • Re: Financing with minimum assets
          phanio Pioneer
          Couple of things - there are SBA loans that love franchises - have you talked to your banker about SBA loans. There are also many franchise lenders - not sure what their requirements are - but a quick search will revile many.

          You talk about your assets and the loans against them - but not about you income. Not only should you have equity in collateral to cover the loan amount - but you much also be able to demonstrate an ability to repay the loan (make monthly payments).

          You might be able to get equity out of your property - but, if they are investor owned - not owner occupied - your LTVs will be lower; around the 60% range.

          Have you thought about owner financing? Let the current owner hold the note if you can come up with a small down (like the $75K). Or, have you talked with the franchisor? What financing options do they have.

          Business Money Today

          • Re: Financing with minimum assets
            billyensign Newbie

            That was a much better response than my question.

            Thank you,

            Here is more detail on my situation.

            My lost my company May 1st of last year to bankruptcy. This was a 10+ mil 25 yr old company my father and I created from $50k. All secured creditors are satisfied and it looks promising for all unsecured creditors to be satisfied.

            For a new career I signed on with a franchise in August of last year, My credit rating was 760, down from the 840 but still high. Next I was to apply for a SBA loan.

            Then my wife went into the hospital for 2 weeks and passed away at the end of September.

            So in late October I worked with a finance person recommended by the franchise, applying for SBA loans. It was totally amazing that as soon as we were to apply to a bank it backed out from the SBA process totally. By Novembers close the SBA process was out of the picture.

            Today my credit rating is down to 605. There is a mistake by my mortgage bank. I paid off the last payment of the mortgage, but the bank did not apply it. The bank is to repair this with the credit agencies.

            Income, I have no job right now, I have been converting my property from commercial to residential and now fully rented. Also I went to franchise school during January. I did blank out in February.

            My conversation with the franchise a month ago was I would work for hire for 1 year, repair my credit, banks would open back up again and try again next year.

            Now I have this wonderful opportunity and I am reaching out, again Thank you for your response.

            Basically it is what it is.Of the $450k assets $300k is in the rental property which has a 60% value. The owner of the prospective franchise seller turned down a $50k down and paper offer from someone else.

            What I do have in my favor is the seller will also be the landlord and I was able to demonstrate to him that I can do the job, there is some comfort there.

            The details,

            Sale of business $225k,
            $135k inclds the business, + $90k assets

            Of the $225k, $150 cash and $75 note by seller

            Additional cash needed $150k

            Business does $800k/ year and can cover loan and note.


            Is there any hope here?

            Thank you,