How the Business Purchase Price is paid
When you want to sell my business San Diego, you need first to understand that there are many financing options available. You will not always get the full amount paid up front. This is why you need to involve an experienced business broker to guide you through the process. At So-Cal Business Brokers we are happy to help with the sale and enlighten you on what to expect. Today we shall be looking at the purchase price payment. How do buyers pay for the deal?
In our experience, one of the most common practices for small business sales financing is seller financing. This is an option in which the seller completes the financing for the buyer. Statistics show that 90% of small business transactions and about 50% of medium business transactions include some sort of seller carry. Seller financing is not an option you should dismiss when you want to sell my business San Diego.
At So-Cal Business Brokers we prefer structuring the deals with no more than 50% seller carry. What this means is that if your business is selling for $200,000, the buyer will have to raise a minimum of $100,000 at the time of sale. The remaining 50% is then paid over a period of 3, 5 or 7 years at an interest of between 5% and 7%. Seller financing will not only benefit the buyer but the seller too. Thanks to the interest rate charged, you will end up making more from the sale than through any other financing option.
Small Business Association Loans
The second most popular option is where the buyer takes out an SBA loan. This option is not for every buyer because the requirements are very strict. The nature of your business and the credit of the buyer can keep them from qualifying for the SBA loan. If the buyer qualifies for this loan, you will be able to get the full amount for your business at closing.
This route has become quite popular for financing more so following the mortgage crisis and the recession. This is an option considered by buyers who need cash fast but cannot get a loan from the financial institutions. There are many alternative lending companies cropping up. A buyer can also choose to work with a partner who helps finance the deal.
If you want to sell my business San Diego, you should expect all manner of financing options. The good news is that our business broker will help determine if an option is good or not. Our team is experienced in all aspects of business sale and will help find the right buyer and settle for the best financing option. Schedule a free consultation today to learn more about our services.