SBA Loans & Commercial Loan Financing For Business
Purchases Priced Between $400,000 And $5,000,000

Cash Flow Based SBA Loans With Little or No Collateral!

Most borrowers are surprised when they find out that we do loans (sometimes multi-million dollar loans) without little or no collateral to secure a SBA loan. Of course other factors in the loan evaluation process should be involved for this to happen. More on this below:

1. The business being purchased needs to have a history of financial stability or growth during the past three years. Same goes for its adjusted net income or cash flow. There should be plenty of coverage to service the debt (i.e. the business should not be overpriced and the deal structure should make sense).

2. Buying the real estate with the business also helps in that purchasing the real estate helps reduce the risk of only buying the business by itself. If you have the chance to purchase the real estate with the business and you have the down payment (10%-15%) for it - it is always better, i.e. the terms, interest rate, and length of the loan will always be better if their is real estate involved with the business purchase. We always advise our clients to purchase the real estate if it is available, and we have never had an unhappy client return upset for doing so!

3. Your credit needs to be spotless and usually north of a 650 credit score.

4. This type of purchase works well when a partner wants to buy out another partner, or a manager (or managers) wants to buy the business from the owner.

5. Borrowers need to have either direct industry experience of the business they are buying or have provable working skill sets that shows they can not only operate the business successfully but make it grow in the future. A great way to demonstrate this is to write a short comprehensive business plan (5-8 pages) that outlines your knowledge not only about the business your are purchasing but also about the industry it is in.

6. A down payment for the SBA loan of 10%+ or more is required and usually the owner needs to take back a note usually on a standby basis, depending on the coverage of the debt service by the provable cash flow off the companies tax returns.

7. New franchise purchases are different in that they don't need any financial past history, but rather the franchise concept is proven and the franchisor provides training to the new buyer.

Very few lenders offer this type of financing because of the risks involved, but if the deal lines up correctly, and because of our working relationship with these special lenders we can, and do obtain this type of niche financing for our clients!

© Peter Siegel, MBA - All Rights Reserved

http://www.BizBuyFinancing.com

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About The Author: Peter Siegel, MBA is the President of BizBuyFinancing. Established since 1991, BizBuyFinancing specializes in obtaining SBA Loans & Conventional financing nationwide for the purchase of small to mid-sized businesses. Loan sizes range from $400K to $5M. More SBA loan tips and information can be read on their SBA Loan - Business Purchase Financing Blog. For more information call BizBuyFinancing at 800-801-4413 or see their website at www.BizBuyFinancing.com

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