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Q: I'am a manager at a business I would like to purchase, do you assist in this type of financing?
A: Yes, we do many employeee or manager buy-outs of businesses (and real estate if it is available). The same forms and paperwork applies to get financing however the loan process is usually quicker than a non-employee/manager purchase. |
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Q: Do you have any loan programs under $200K?
A: Yes we do. It is called our Minimum Loan Program. It is for our clients/borrowers who do not meet our minimum requirements for a bigger loan (we typically only do loan amounts between $200K and $5M). |
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Q: Do I need to be currently employed to get a loan from you to buy a business?
A: No. Not with us - our focus is on the business your are buying and how it relates to your PAST work experience. We also are more interested in the financial performance of the business you are buying not your current employement. Many of our client/borrowers are unemployed currently searching to purchase a business. |
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Q: Do you assist with Re-Financings of business purchases or business purchases with real estate?
A: Yes we assist with re-financings all the time when buyers or owners have loans that have balloon payments coming up soon or the terms and conditions of a note/loan are excessive (short term, etc.) If you want to refinance a business purchase or business purchase with real estate please call us for more information. |
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Q: What geographic area do you cover for financing a deal?
A: We cover the entire United States. We have relationships with top lenders and know who likes what types of deals and who can move the quickest on which types and structures of transactions. |
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Q: Will I have to put my home up for collaterial when I get financing to buy a business?
A: Not necessarily. It depends on the size of the deal and how it is structured. SBA loans require that if you have equity in your home they will attach it - this is a SBA stipulation not a lender requirement. We do many of our deals without home equity required. Our lenders are looking for good cash flow (adjusted net income) not necessarily collaterial/equity when they look at deals! |
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Q: What is the optimal way to structure a deal to get financing?
A: There are many ways to optimize for business purchase financing - the buyer will need to put down 15%-30% down, if the owner can carryback a portion of the purchase price and if you can pledge any personal real estate toward the purchase that too will influence those during the underwriting process. Factors that effect the deal structure and terms are: provable cash flow of the business, history of the company earnings and cash flow, the industry the business is in, the work experience/skill set of the buyer, the lease term left on the business, and some other factors. All of these play a role if you get a loan, the terms of the loan, the interest rate, etc. |
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Q: We are looking to buy an existing franchise? Do you finance franchise resales?
A: Yes we do - we have several lenders who specialize in various types of franchises, our loan amounts vary between $200,000 and $5,000,000. We provide financing for either franchise resales or new franchises as long as the loan amount is greater that $200K and less than $5M. |
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Q: I am thinking of selling my business to either my manager or employees - can you assist me with getting them financing to do so?
A: We assist with many buyout financings. We have many partners buying out other partners, and employees or managers buying the business they work at with our financial assistance. |
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Q: Do you work with people looking for start-up financing?
A: No - we do not offer this type of financing. We are very specfic and specialized about our services. We do assist those buying a new franchise but we only provide with loans of amounts between $200K and $5M. |
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Q: Is good to excellent credit important?
A: Absolutely. You can offset this factor sometimes with other criteria such as collaterial, large down payment and work/management experience in relationship to the type of business your buying - but overall good to excellent credit is very important in getting financing either SBA or conventional financing to buy a business. |
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Q: I am selling my business - why should I look into financing for buyers before I sell?
A: Absolutely! We work with many owner/sellers who pre-qualify their business before they sell for financing. If you have financing lined up for your business purchase it will accomplish several things. 1. It speeds the process up so buyers don't have to search for financing - and may go to the wrong source and get turned down! 2. It opens the door to many more buyers than just the ones who need to buy your business with all cash. |
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Q: I bought a business and would like to refinance the note I have with the previous owner. Do you do refinancing also?
A: Yes - we do many refinancings of notes of past business purchases where the terms and conditions are excessive to what is available through our lenders at this time. Call us at 800-276-3040 to see if your situation would qualify for this type of refinancing. |
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Q: What is your success rate of getting deals financed?
A: Since our services are so specialized, we have a very high degree of success (over 90%)! We are a specialized service and know our markets very well for SBA and Commercial Financing for purchases of small & mid-sized businesses, franchises, professional practices, and commercial real estate. |
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Q: What do lenders look for when they are determining whether a deal gets financing?
A: Some of the basics are: 1. Cash flow of the business - they want to make sure the business under new owners can pay back the loan as well as provide a living for the buyer(s). 2. Managment/Experience, skills that relate to the business they are buying 3. Good to excellent credit. 4. What are the living expenses of the borrower - does the cash flow of the business cover the debt service and leave enough for that particular borrowers living expenses etc. 5. Is there income coming from other sources besides the business the buyer is buying - spouse's income, investments etc. that can help out if the cash flow isn't sufficient to cover the borrowers living expenses. 6. Steady to Growing History Of Revenues & Adjusted Net Income Of The Business + approximately 25 other factors. |
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Q: How much money do I have to put down on the purchase price to get a loan?
A: Lenders want to see business buyers take a risk also - the minimum down is 10%, but 20% down is more common with most of our lenders. Buyers get their down payment from many different sources - savings, equity in their homes, retirement funds (we can assist you without incurring a tax penalty!) or a gift letter from a family member. We have many strategies for buyers when it comes to buying a business with SBA or Commercial financing. |
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Q: How are you different from other financing sources?
A: Since we specialize only in this type of financing (getting financing to buy businesses) - we track all the top lenders who offer this type of financing to business buyers and sellers and know their nuances - what they like, what they'll do and not do - this saves you alot of time and gets you the best deal possible in the least amount of time! Remember lenders change their lending criteria often, another good reason to let us assist you in getting you financing to purchase a business. |
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Q: How long does it take to get financing?
A: Approval letters take between 1-4 days and actual funding takes between 23-40 days depending on the situation and how prepared you are with your paperwork - application and forms etc. Thats where we come in - we know which lenders are motivated to lend and their specialty and we will assist you throughout the loan process making sure you get your loan for your business purchase in an efficient and timely manner! |
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Q: What are the length of the notes on loans to buy businesses?
A: It varies usually anywhere from 10 - 25 Years depending if it is a SBA loan or conventional loan. The loans are fully amortized and usually there are no pre-payment penalties for early pay-off. Term of the loan is also dependent on if the business only is being sold or if their is real estate along with the business purchase. |
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Q: Are there any penalties for paying off a loan early?
A: Depends on the loan, but usually 90% of the time there are no penalties for paying of the loan early with our lenders. |
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Q: Do I need to be a U.S. Citizen to get a loan to buy a business?
A: You need to be a U.S. Citizen or at least have a green card with Permanant Resident Alien marked on it. |
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Q: Are all SBA & commercial loans for business purchases the same?
A: Not at all. All lenders have their own criteria for lending with SBA loans for business purchases. Lender criteria can change frequently regarding SBA loans & commercial loans criteria for business purchases. We keep on top of all changes in criteria - that is why so many owner/sellers, business brokers/agents & business buyers utilize our services to find them business purchase financing for their deal! |
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Q: Is cash flow or adjusted net income important in getting a loan to buy a business? What about revenue trends in the business?
A: Yes it is. Our lenders are looking more for a positive cash flow or adjusted net income than they are for equity or collaterial in real estate. The business you are buying should have a positive adjusted net income (owners salary + net income + depreciation + other addbacks that aren't neccessarily business expenses). Even if the tax returns are showing a loss - with certain addbacks you can still get a loan with us as long as the adjusted net is positive! Revenue and cash flow trends for the previous 3 years is important. The business must have stable or growing revenues or cash flow to be viable for financing. |
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Q: Does the business I am buying need to have assets to back up the deal for collaterial?
A: Not necessarily, we work primarily with cash flow based lenders who are more interested in provable cash flow (adjusted net income) from the business not necessariy assets to back up the loan (as with asset based lenders). |
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Q: Do you finance business purchases that have commercial real estate with them?
A: Yes we do. Over 30% of our loans to borrowers include commercial real estate with the business purchase. The terms of the loan can extend up to 25 years on the purchase of the business and the real estate instead of the usual 10 year term on business only purchases. If you can buy the real estate with the business it is always better to do so! |
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Q: Do you work with business brokers and agents to secure them financing for their clients?
A: Yes we do. We pre-qual many deals for business brokers and agents before they go to market so that they know what their options are with buyers before the phone starts to ring! All information is also put into our Loan Tracker Program so that information does not have to be repeated. Brokers and agents tell us our system saves them alot of time and allows them to concentrate on their deals instead of having to find qualified lenders for their deals! |
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Q: Are Pre-Qualification letters from other lenders worth getting?
A: Usually not. Most other lenders ask you 2-3 basic questions and then fax you a form Pre-Qualification letter with numerous disclosures on them about the "future quality of the business being purchased". Most brokers, agents and owners don't take these letters seriously. That is why we started our TOTAL Pre-Qualification & Guaranteed Loan Program. This program guarantees buyers they will get financing for a business purchase through our network of financial/loan institutions. Buyers who complete our program and package get a coveted TOTAL Pre-Qualification letter that assures business brokers, agents, and owners they are qualified for financing! In fact many sellers and brokers who sell "better businesses" will only deal with buyers who have completed our pre-financing program, knowing the buyers are serious, highly pre-qualified and have their financing packages/info in place for a smoother transaction. |
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Q: What size loans do you do?
A: We provide nationwide assistance from start to finish with financing for loan amounts between $200K and $5M for the purchase of: small and mid-sized businesses, professional practices, franchises, and commercial real estate. |
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