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How much down?

Is there a typical percentage down (out of pocket) when buying a business? How much should I plan to have in backup? I know this is a pretty generic question, I'm wondering if there are any guidelines and how much of a business I can buy with money I have.

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Answers (5)
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Jan 22, 2017
Michelle Orr
Wells Fargo SBA Lending
Business Development Officer
Fairfield County, CT

I agree with the other comments already posted, but have one to add. The amount of financing using an SBA loan will ultimately be determined by the cash flow, industry/property type and how much of the purchase price is allocated to goodwill since the SBA recently issued a new policy pertaining to using SBA funds to finance goodwill.

May 25, 2009
Steven St
World Business Partners, Inc
Los Angeles County, CA

It depends on the industry and how you are financing the purchase. Most Seller LOVE for you to get a SBA loan and completely cash them out. That it NOT usually how it goes.
You can pay anywhere from 0% to 100% depending on the business. There is no rule of thumb and don't let anyone tell you different.

I will give you a tip though, how much the Seller likes you goes a very very very long way to working out a good deal with good terms. The more the Seller likes you the more willing they are to give you some room on price and down payment (usually).

Apr 25, 2009
Ken Ducey, Jr.
Princeton Capital Strategies
Fairfield County, CT

Don is right on - and I would also add the idea is to get more than one offer. This way you can have a choice to how much risk or postponed income you take vs. the purchase price.

Apr 6, 2009
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The BAF Group LLC

It will range from 10% to 30%, depending upon the type of loan you are trying to obtain. If the Seller is carrying the financing, it can be all over the place. The best rule of thumb is 20%, which will fit into most SBA-oriented loan programs.

Apr 5, 2009

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