Buying an existing business is a viable option before starting your own business, but careful and educated research into all operational and financials is essential. As the prospective business buyer, you must carefully analyze the existing business to be certain that it includes accurate and realistic information and it is what you expect to eventually run.
Financing Options Available
Advisors at the Small Business Development Center (SBDC) help local small businesses get free coaching and advice to help grow or purchase a business.
What kind of down payment do I need to purchase a business?
This is a difficult answer as it is anywhere from 10-25%. This is dependent on the loan program and type of business the industry is in.
What kind of experience do I need?
Banks will always want to have similar experience when purchasing a business.
Good Example: You are a general contractor and you want to buy a window installation business
Bad Example: You are a doctor and you want to purchase a restaurant.
Do I need collateral?
Yes, the more collateral you have the better the loan process will go. Collateral is generally equity in a home- not vehicles, jewelry etc. The good news is SBA loans cannot turn you down for lack of collateral, but banks can, In general, banks will look for any available collateral to secure the loan.
Good Example: $550,000 purchase price, 15% down, You have $100,000 equity in your home and business assets of $50,000 this would be an ok SBA deal.
Bad Example: $550,000 purchase price, 15% down, you rent and have no assets, business assets are $50,000, this could be difficult.
Have more questions? Are you located in Washington, Oregon or Idaho?
Contact Paul Long
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