ArticleBiz.com :: Free article content
Authors: Maximum article exposure. Publishers: Reprintable article content.
BROWSE ARTICLES
ArticleBiz.com Home
Featured Articles
Recently Added Articles
Most Viewed Articles
Article Comments
Advanced Article Search
AUTHORS
Submit Article
Check Article Status
Author TOS
PUBLISHERS
RSS Article Feeds
Terms of Service

Financing Options for Buying a Business
Home Business
By: Jessica Fialkovich Email Article
Word Count: 595 Digg it | Del.icio.us it | Google it | StumbleUpon it

  

To many buying a business may seem like an unaffordable pipe dream, but Transworld Business Advisors is here to tell you that simply is not true! There are a number of financing options for buying a company and if you work with a professional business broker, there is often room for creativity when it comes to structuring a deal to ensure a buyer can buy their ideal business and the seller receives the ROI they are hoping for.

Cash is King!
The first option to finance the purchase of a business is an obvious choice, cash, and is usually part of most business acquisitions through the down payment. While taking cash out of savings is simple enough, there is also the opportunity to withdraw money from your 401K to invest in your business. This option can incur tax penalties, but there is a way to structure a 401K withdrawal to minimize taxes, by establishing a C-corporation and essentially buying stock in your business. The last option for using cash to buy a business is through a home equity line of credit (HELOC).

Traditional Bank and SBA Loan Methods
Another option you may be familiar with is the conventional bank loan. This loan option is not often used to buy a business, but is still available if it is the best fit. A more traditional loan option to finance the purchase of a business is to use an SBA Loan which is a loan that is guaranteed by the Small Business Administration (SBA). There are quite a few SBA preferred lenders in Colorado and across the United States that have been pre-approved to extend small business loans and can make the SBA loan process smooth sailing. Most SBA loans require at least a 10% down payment in addition to the loan amount and some pre-requisite requirements that will need to be met, including a business plan.

The Exciting World of Seller Financing
Many business buyers are not familiar with the seller carry or the seller financing option for financing the purchase of a company. Seller financing can be described exactly as it sounds - the seller of the company finances a portion of the business purchase. Similar to the SBA loan method, seller financing usually requires a down payment, as well as interest on the loan amount. One of the major considerations for this financing option is to make sure the terms of the loan still allow for a good level of cash flow within the business. The unique piece of seller financing is that the seller still has a vested interest in the success of the small business, often making themselves more available to the new owner during the first few years of the transition to the new ownership.

Have Any Wealthy Acquaintances?
One of the last options for financing a business acquisition is gathering investors. Maybe you have a family member interested in investing in your entrepreneurial endeavors or a local venture capital group that makes small business investments? The investor route requires a private agreement between the buyer of the business and their investors to outline the terms of the financial agreement. In an ideal world the terms of this financial agreement would be set up before the business acquisition purchase process has even begun.

If you are interested in learning more about the financing options for buying a company, schedule a free consultation with one of our business brokers or visit our website for more information.

Jessica Fialkovich is an M&A expert & award-winning business owner whose mission is to help business owners leave their legacy and exit successfully. Over the past 5 years, Jessica has overseen $60 million in transactions and mentored 1,900+ business owners on buying and selling a business. Currently, she’s the President & Co-Founder of Transworld Business Advisors - Rocky Mountain, Colorado’s top business brokerage firm. For more information, visit www.tworlddenver.com.

Article Source:
http://www.articlebiz.com/article/1051648094-1-financing-options-for-buying-a-business/

This article has been viewed 60 times.

Rate Article
Rating: 0 / 5 stars - 0 vote(s).

Article Comments
There are no comments for this article.

Leave A Reply
 Your Name
 Your Email Address [will not be published]
 Your Website [optional]
 What is five + seven? [tell us you're human]
Notify me of followup comments via email


Related Articles


Copyright © 2019 by ArticleBiz.com. All rights reserved.

Terms of Service | Privacy Policy | Contact Us | Submit Article | Editorial