Had a potential SBA Loan client call today who wanted to get SBA loan financing to purchase a business. However there were several items he mentioned that were of concern:
1. Gift for down payment coming from a non-family member
2. Potential business partner has bad credit
3. Tax returns on business being purchased look bad - doesn't report income on returns
Gifts for down payments must come from family members of the borrower. A potential partner with bad credit is not going to bode well in the underwriting process - skip this person and find another partner (if you actually need a partner). If a seller is cheating on their tax returns and not reporting income - you are going to have a problem getting financing, since usually the income off the tax returns doesn't show adequate income to pay the debt service of the loan!
10/4/06 - Today's SBA Loan Tip For Business Purchase Loans/Financing:
Owner/Sellers Can Assist Buyers With Financing By Pre-Qualifing Before They Sell
Based on your financials and tax returns from the previous three years you need to know if potential buyers would be eligible to get a loan to buy your business. If you know that your business is not eligible for financing than you know that the deal structure for selling your business will be very different without financing involved. More than half of our consulting clients at BizBuyFinancing are business owners who line up financing for buyers before they go to market - smart move!
Today's Featured SBA Pre-Qualified Business Opportunities For Sale
1. San Fernando Valley, Los Angeles County, California based Property Restoration Service Business For Sale - Property Restoration-Water, Fire & Mold. State Of The Art Methods And Equipment.. Full Service Quality Restoration Company That Uses State Of The Art Methods And Equipments, Plus Aggressive Marketing Referral Program. Making This Business Extremely Profitable. The Company Services Los Angeles, Orange, And Ventura County Since 1999. They Are Known For Their 24-Hour Service, 365 Days A Year, Experienced Technicians And Having The Latest In Equipment. In The Year Of 2005 They Completed 1,231 Water Damage, Fire, And Mold Projects. They Provide Service To Residential As Well As Commercial Accounts. Providing Direct Billing To Insurance, Water Extraction, Sewage Extraction, Structural Drying, Fire Damage Restoration, Smoke Damage Restoration, Mold Remediation, Asbestos/Lead Abatement, Contents Pack-Out/Pack-Back, Emergency Roof Cover, And Carpet & Pad Replacement. Licensed Contractor. Ideal For The Buyer With A Construction Background. Deal Structure: Price: 1,800,000, Adjusted Net: 500,000.
2. Columbus, Franklin County, Ohio based Plumbing Supply Company For Sale, With A Long, Multi-Generational History At Current Site. This Plumbing Supply Company, Organized As A C Corp., Has A Long, Multi-Generational History At Its Current Location. It Supplies Plumbing, Heating, Air Conditioning, And Some Electrical Products From Its One Physical Location To Plumbing Contractors, Excavators, General Contractors, Institutional Custodians, And Water Well Professionals. 90% Of Its Business Is Wholesale And 10% Via Retail To Walk-In Traffic. Owner's Strong Preference Is To Sell The Business With The Real Estate. Owner Is Willing To Assist A New Owner For A Period Of Time And Other Terms As Specified In A Purchase Agreement. Deal Structure: Price: 1,200,000.
* Note: These businesses have been business pre-qualified only - buyers of these businesses will also have to be pre-qualified - before SBA loan business purchase financing may be obtained. Approximately 32 different factors (buyer/seller info) are evaluated in the SBA loan process for business purchase loan financing.
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