More and more businesses are coming up for sale creating excellent opportunities for people who want to be their own boss.  There are several reasons to buy an already operating business rather than starting from scratch.  You have historical financial statements and business tax returns to analyze the past performance of the business in order to determine its future prospects.  Something else very important is that there is already a salary for the owner in place.  If there isn’t it raises a big red flag.  If the business can’t or doesn’t pay the owner, what would it be for you?  Another plus for an existing business is that the day-to-day infrastructure is already in place.  In a startup obviously you have to build it from scratch with the attendant costs, and usually the owner is the last to get paid.

There are as many ways to finance a business purchase as there are businesses for sale.  Every deal is a snowflake.  But often the best way to finance is a bank loan, and at the top of the list would be SBA loans (which are bank loans underwritten just like commercial bank loans but with an SBA guarantee).  And the biggest benefit of an SBA loan is the long amortization allowed, as much as 10 years which can be a significant benefit to the monthly cash flow of the business by keeping payments lower.

Comments Off


0 Comments

Sorry, the comment form is closed at this time.