For many people seeking to purchase their own companies, business finance brokers are as important as business brokers. The business broker will be able help you find a good business, and even aid you in negotiating a good deal. But that time and effort yields no result if you can’t get the cash needed to complete the deal. And the smartest buyers start their business search with a finance specialist lining up the funds, so the buyer can move quickly and successfully when the right business is identified.
The trick is to know what to look for when interviewing finance brokers. Some clues are:
1. Experience: When using some services, we like to give newcomers a chance. Perhaps their energy and enthusiasm will make up for the lack of know-how. Getting help in the competitive, fast-moving world of small business purchase financing is not the time to work with a beginner. Make sure the financing representative you select has been involved specifically in small business purchase financing for at least three years, and involved in several transactions.
2. Connections: It’s not only "what" business finance brokers know that makes them successful, it also is “whom” they know. A competent finance broker works with representatives of lending organizations who are actively serving the small business market, understand your kind of deal and won’t put your request at the back of a long waiting line. Among the top reasons buyers lose good business opportunities is getting aligned with lenders that prove to be too busy or too disinterested to be of real assistance. You want to proceed with loan processing during the days after an accepted offer, not wait on an unresponsive underwriter until the loan contingency period expires and it’s too late.
3. Business analysis skill: Understanding the business you want to buy, and knowing how to "package" it for a lender/financial institution, is a critical capability if a business acquisition financing broker is to help you. The lender’s underwriters may not know how to calculate whether a business produces the cash flow needed to meet payments on the requested loan. That's what a super competent loan broker can do. It’s a shame to lose a good opportunity because the loan "specialist" didn’t know how to “sell” the deal to his underwriters, or investors.
4. Qualifying: And since the borrower also has to be approved by a lender before the money will start to flow, the loan broker needs to be well-versed in the art of presenting the buyer to proposed lenders in a way that encourages their approval. This is more than a matter of simply filling out some forms and attaching a bank statement. The financing broker you want to work with is the one who generates your credit report right at the start of your business hunt, looking for credit history problems that can be corrected before the application is submitted. And the able financing broker professional will help you learn to write a business plan, then will teach you to use it to persuade lenders that their money is in good hands if they approve your loan application.
These characteristics should help guide the choice when buyers are interviewing prospective business finance brokers to help them succeed at buying a good business.
About The Author: For over 25 years Peter Siegel, MBA has provided niche business purchase financial advisory and loan broker services with SBA Loans, Non-SBA Loans, Retirement Plan Conversions, Hard Money, Gap/Bridge Financing, Note Restructures, etc. He assists with financing for: Business Purchases, Business With Real Estate Purchases, Franchise Resale Purchases, New Franchise Purchases, Pay Off Existing Seller Notes, Partner Buyouts, Employee Buyouts. Peter Siegel can be reached direct toll free at 888-983-1632 regarding getting professionally pre-qualified, advisory & loan placement services.