Buy a Business Question

This topic contains 1 reply, has 1 voice, and was last updated by  Paul Long 3 weeks, 5 days ago.

Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • #2296 Reply

    Anonymous

    I am considering buying an existing business that has been around for 5 years with good cash flow. I have a family member who has worked at this business for 18 years. It was previously in business for 20+ years before new ownership. They want 3 million. There is land & buildings inventory equipment, etc. would I need $600k? I don’t have that. I do have good equity in my home about 200k plus 100k in the bank. I spoke with a bank who said they do need 5% down. Am I wasting my time if I don’t have 600k? I have spoken with different lenders and they do say the need to see tax returns to make a determination. I guess I need to talk to more banks or understand if I could put less then 20% down. Any advise or insight will be helpful.

    #2302 Reply

    Paul Long
    Keymaster

    Thank you for your Question: You are correct about the 5%, SBA required 10% down. However, 5% must be cash from the buyer and the other 5% can be in the form of a seller carryback note. The 7a program would be a good program for this. Keep in mind that family gifts can be considered a part of your cash equity, however it cannot be borrowed so using a HELOC to get the cash you need isn’t an option unless you have outside source of income to support that HELOC payment. You can check out a guide that I created about acquisition financing that can give you more information at http://paultlong.com/buyabusiness-2/

Viewing 2 posts - 1 through 2 (of 2 total)
Reply To: Buy a Business Question
Your information: