Available Financing Options When Buying a Business
When buyers contact a business broker El Cajon, they often have questions on financing options. Buying a business is exciting but securing the finances needed for the acquisition is a whole different thing. One of our roles at So-Cal Business Brokers is to help you secure financing. Our team will consider the type of business you want to purchase, look at your finances and recommend the best financing options for you. We will also help you find the right lender and get the best terms.
There are basically four financing options available for business buyers: cash, bank financing, seller financing and investors. Our business brokers El Cajon will help you carefully evaluate your options.
Some buyers are fortunate enough to have the money needed to buy a business. They don’t need help from lenders. With this option, you can have the full amount saved or have the down payment ready and enough income to settle the balance. If this is your situation, we will see to it that you get the best deal from the seller. We will work towards bringing down the selling price. Needless to say, sellers love buyers who buy in cash. We will use that to your advantage.
If you don’t have the money on you, bank financing is one of the first options you will consider. Our business broker El Cajon will start by helping you understand the difference between conventional loans and the SBA loans. SBA loans are guaranteed by the Small Business Administration and instituted by banking institutions. Banks have their own standards and requirements for this loan. Our team will help get the best terms in an SBA loan.
Did you know that a seller can give you the loan you need to buy his/her business? This is achieved through a method known as seller financing. In our experience, a seller will mostly require a 50% down payment. We can help negotiate the down payment. The problem with this financing option is that the interest rate is a bit higher than what you get from banks. The good news is that getting seller financing guarantees you will get all the support you need because payment to the owner will depend on the success of the business.
The fourth option is that of investor loans. This requires private agreements between the involved parties. Our team will help draft the agreements well in advance and ensure the terms are fair. We recommend that you set the terms before you find a company to purchase.
If you are thinking of buying a business, give us a call and leverage on the expertise of our business brokers El Cajon. We will help you find the right business and make it easy for you to secure financing.