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    5 Replies Latest reply on Nov 6, 2013 7:12 AM by transcribe

    Financing

    herandi Wayfarer


      I am interested in purchasing an existing business.  I understand from proffesionals that it is a lucrative business and is very bankable.  How much of the cost of the business can be financed and what is the usuall % of down payment?

        • Re: Financing
          Guide

          Hi Herandi,

           

          Welcome to the forum. Could you please tell us a little bit more about your circumstance and the business so that we may give you better responses. There are many ways to skin a cat so to speak and there are many ways to finance a business. 

           

          Have you had the business evaluated by an accountant? How much is the business worth? How much is the present owner asking for as a down payment? What kind of a relationship do you have with the owner? What kind of a business agreement is the owner willing to take? Have you tried contacting banks to see what kind of loans they have to offer you? What kind of business is it?

           

          Melinda

            • Re: Financing
              herandi Wayfarer

              Hi Melinda,

               

              We (my wife and I ) are in the beginiing stages of this.  I am a little reluctant to provide much more information at this time due to the current privacy issue and out of respect for the current owner.  I will try to give you a bit more information and hopefully it will help get us going in the right direction.

               

              We do noy have a relationship with the owner other than a visit with him to discuss the business and take a look at the facility.  I feel our visit went quite well.  Through the broker, it was mentioned that the owner will possibly want 40+% down.  We feel that is a little much.  We have not contacted a bank as of yet but have discussed where we night go.  After our discussion with the owner and a discussion with the broker we were left with the feeling that there would be absolutely no problem obtaining financing. Again my question is why are they asking for the large down payment.

               

              This is a service business.

              • Re: Financing
                herandi Wayfarer

                Just wondering if you received my response to your e-mail?

                  • Re: Financing
                    Guide

                    Thank you for providing more information about your circumstance. I did receive a notification that you have responded to my post.

                     

                    On average a down payment of up to 20% seems to be the acceptable. Is this a case where the owner wants to sell or you approached them to buy? Have you asked the broker or the owner why they feel that 40% or more is the only way to purchase the business? I would still have the business evaluated by an accountant to see where there finances might be. You don't want to be surprised by the unexpected.

                     

                    As far as loans are concerned, you could go to the SBA to help with this. They may also be able to offer other information as well.

                     

                    Good luck and keep us posted.

                     

                    Melinda

                • Re: Financing
                  AngelBiz Tracker

                  herandi - I don't think there is one answer that fits all situations. This is not like buying a house. Every business transaction is unique and number of factors determine the amount you can finance and the % down payment. My only advice is to pursue several avenues of funding. You don't want to rely only on the owner financing. Talk to banks, private lenders, SBA and others.

                  • Re: Financing
                    transcribe Scout

                    No matter what type of business you would like to open, there is probably a federal government grant that can help you turn the key to your new business opportunity. Create an effective business plan that explains business detail. Also you will need to create both a start-up and operational budget for a rough estimate of the amount of funding that you will require to get your business up.