Payment Options for Buying an Existing Business
One of the advantages of buying an existing business is that you are purchasing a business that is currently operating and do not need to “re-invent the wheel.” However, prices for existing business can be quite high since you may be buying client lists and business secrets, along with the existing business. In order to finance your purchase you will need an array of options in order to secure money for acquiring your new business.
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Instructions
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Start by applying for a business or commercial loan from your local bank. Most banks are going to require that the existing business be operating for the past two years or more with a good credit record. You will need to certify this information with the business financial records and personal financial statements from everyone who is going to own 20% or more of the business.
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If you are not eligible for a business loan trough your local bank, the US Small Business Administration (SBA) can help. Although SBA does not provide loans, it can serve as a guarantor for your bank loan and thus increase your chance of obtaining such loan from your local banking institution. Your bank will decide if your application is eligible for a guarantee from SBA and will contact SBA directly.
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Look into Certified Development Companies, which are non-profit organizations or companies established to contribute to the economy in the local counties or states where they are located. These non-profit organizations are certified by the SBA to provide financial assistance to small businesses. To find a Certified Development Company in your area, you can contact the National Association of Certified Development Companies.
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Contact your family, friends, associates, clients and equipment suppliers for financing. All these people can be private investors who can provide financing by just by asking them. Many individuals are resorting to private investors instead of traditional ways of financing, since private investors are more likely to provide you with the money you need to acquire a business. Make sure to contact a corporate or business attorney who specializes in investment opportunities in order to provide you with the guidelines and contracts for private financing.
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