If a business purchase can seem like an impossible task, you’re not alone. There are thousands of people who buy businesses every year! So before you start looking for the perfect company to take over, we’ve got some tips on how you might go about financing your purchase.
Using Your Own Money
One of the best and most cost-efficient ways to finance a business purchase is by using your own capital. If you’re able to support the entire transaction with money from home equity, retirement accounts, or savings then that’s great! However for many buyers it will take additional financing in order to close on an expensive property.
Vendor financing is a flexible option that can enable you to buy the business of your dreams. This type of financing will allow for amortisation over time, and rather than take out loans from traditional lenders like banks or credit unions, the vendor provides this funding directly with proceeds coming in from their newly acquired company.
If purchasing a franchised operation comes into consideration as well then there are additional benefits such as access to training programs since these businesses come with an established system already put forth by its creators – all which factors into why more people choose vendor finance when buying through acquisition!
Business Loans are one of the best ways to get financing for a new business. Banks don’t lend capital, they make loans contingent on your ability to repay and give them security against bad debt. But banks can add qualifications like credit score or personal income that you’ll need in order to qualify for their loan program. If those requirements aren’t met then it’s not worth worrying about which bank offers what type of terms!
Business loans are an excellent way for you to purchase a business without the high-risk that some banks may see as too difficult. For your convenience we link here to a business loan comparison site. We are not affiliated with this site, please do your own due diligence.
With this financing route, purchasers can get up to 80% funding on most of their purchases and have many options available when it comes time to pay back your loan! This is perfect if you don’t want any strings attached or would like more flexibility in how much interest rates cost. To qualify with these loans, applicants must:
- Provide tax information from previous three years
- Disclose personal financial history (including credit score)
- Have at least 20% equity – put down deposit into account
- Prove experience within the niche market or industry they plan on working in
To many, the idea of owning a business can seem like an unattainable goal. However, it is possible for people with just enough capital to purchase what they need in order to start their own venture and build something that’s truly theirs. For those who would love nothing more than having this kind of independence but are unable because financial institutions only approve loans if you have experience or collateral, you may still be able to get financing by proving your creditworthiness!
Banks want someone who will repay money no matter how successful their enterprise is. Therefore, as long as you prove that you’re capable of paying back whatever loan amount they give out regardless whether or not the company’s doing well financially now (a great credit score means everything).
Marc Phillips is a professional business broker who can help you with your next purchase. Contact 455 150 990 to discuss how we might be able to assist your business purchase, visit our website or contact page for further information on the services we offer.
3 Ways to Finance a Business Purchase
Sydney born, having spent six years serving the community as a New South Wales Police Officer before deciding to relocate to the UK where he pursued his passion for sales, the financial markets and the real estate industry.
15 years as a licensed agent, ten of those years in fast-paced markets of the USA and the UK, Marc is an expert in business brokerage.
Business owners are invited to consider Marc when seeking a business to buy or sell in Queensland with local knowledge in the South East Queensland market including Brisbane, Gold Coast, the Sunshine Coast and the Darling Downs.
Local knowledge and surgical negotiation skills mean a keen eye on every detail. Marc has a profound knowledge of legal frameworks in all aspects of business acquisition and sales process.