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If a business buyer can not qualify for traditional financing, what are the options available to them?

Most business acquisitions in the small business space are financed through a Small Business Administration (SBA) supported loan. However, some buyers find they will not qualify for SBA financing due to reasons such as personal credit, lack of sufficient related experience, etc... Where does one turn for financing if they find themselves in this scenario?

Clarence S. Day III

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Answers (8)
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Good day to you and thank you for your time to read this.

We are financial services and asset management company.

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Jul 15, 2016
Allan Stevens
It's Lunch Time by Platinum Marketing
"We Deliver Lunch"
Bernalillo County, NM

Hello Clarence,

The Business Finance Suite brings over 2100 lenders in over 30 core financial products to the small business community. Over 80% of all funding applications to banks for traditional or SBA backed loans are turned down.

The business owner doesn't know why and the banks don't say a word other than REJECTED!

The Business Finance Suite let's the proverbial "cat out of the bag". We know the lending criteria and help our clients reach it for better chances of getting APPROVED!

We specialize in obtaining funding for business owners, both new and established, including loans, credit lines, business credit cards, and much more.

Visit us at: and view the Business Finance Suite "VIP Tour" video.

This is a proven, no nonsense approach to get you the money and business credit lines that you need for your business, that does not fail!

Talk soon,

Allan Stevens
Business Cash & Credit Line Center

Aug 30, 2013
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IC Tool Suite
Sarasota County, FL

A credit partner such as a spouse, relative, business partner or associate is a great way to go if someone is off the mark on credit but it trying to get a loan in place. You can also use certain 401Ks or IRAs to roll them over towards a business and you do not incur early withdrawal fees.

Best of luck,

John Briches

Apr 1, 2013
Clarence S. Day III
Griffin Moor International, LLP
Managing Partner
Prince Georges County, MD


You are absolutely correct. Most sales in the small business space are performed as an asset sale and advancing receivables offers liquidity without significant credit concerns and at a reasonable cost.

There is an appropriate strategy when considering a single purpose host entity, however those are rare in the small business space unless the company is either financial in nature, i.e. RIA, Insurance Agency, etc.. or a performing asset of an investment portfolio. I appreciate the out of the box approach.

You are correct in your statement that most promises of alternative financing should be met with healthy skepticism. And the 3 F's (family, friends, & fools) are the best option for terms in most cases for the borrower.

I really appreciate all the answers given, this post will hopefully provide someone seeking assistant with at least a reference.

Mar 26, 2013
William A. Price
Business Lawyer
DuPage County, IL

There are many options besides bank financing. If your or the target business's order to receipt of payment cycle is short enough, a factor could buy your account receivable or payable (delivered goods invoice or purchase order) and collect from your credit-worthy clients, giving you 90% or 75% or so of funds, collecting it themselves, and then paying you all but a finance charge (about 1.5% per month on the total invoice amont) of what they collect. You could also negotiate an earn-out with a seller, adding staff and clients and your other business resources besides cash, and paying them off a higher price over a period of years than they could get based on the one-year earn-out SBA loan rules allow. You could also break up the acquired business, selling the real estate or other assets to give the seller immediate cash, and leasing same back as needed.

Hope this helps,

Bill Price

Mar 26, 2013
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The BAF Group LLC

Mr. Nichols, that is a pretty radical and rather sophisticated approach, for a typical, small business. If someone does not have good credit or sufficient related experience, setting up an LLC is not going to help much. How many investors are going to offer money on that basis?

Mar 26, 2013
No User Photo

Create an LLC for the purpose of selling stock, sell half to buy the business, money goes in escrow with your atty until you have enough to do the deal. If the company is big enough just do a DPO and take it public.

Mar 26, 2013
No User Photo
The BAF Group LLC

Family and friends are probably the only ways to do it. The Seller is not going to finance if he/she is not secure in the Buyer's abilities, either finanically or experience-wise. There are a lot of people that will promise you other, alternative opportunities for financing, but the vast majority are either scam artists or otherwise not to be believed.

Mar 24, 2013

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