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I'm trying to buy an existing business (Franchise) through the owner

I'm trying to buy an existing business through the owner, but as of now Mine and my wife's annual income is around 36,000 a year and just having a hard time trying to find someone to give me a loan, the business is very profitable and I would still be working my other two jobs as well and getting a 20k raise in a year so paying off the loan wouldn't be a problem at all...I don't have any bills that I myself is paying off and just moved into a house that is owned so no rent or anything like that, the one problem we do have right now is that the owner wants us to get pre approved before he shows up all the business numbers, the only number I know is gross annual and it's 260,000 plus..... think y'all maybe can help me out at all? Thanks...asking price for business is 225,000

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The BAF Group LLC
MD

Doug, the first thing I would say is to use stay away from the vast majority of "lenders", populating this bulletin board. Most appear to be either scam artists or amateurs. Some are legitimate, but finding those that are can be an incredible risk.. That being said, you state that you cannot find anyone to give you a loan, but you do not state who you have contacted. So the question begs, what exactly have you tried, thus far? Moreover, what is your credit score? What is your wife's credit score?

And what kind of businesses this? You say it's a franchise, but you don't say what kind. And paying $225,000 for a $260,000 annual revenue concerns me. In the vast majority of cases, the gross Revenue means nothing; it is the Net figure that determines the price, most frequently. Particularly in getting a loan, the Net income is almost the only thing a lender will want to know.

If I were in your position, I would contact a credit union, or a small local, or perhaps regional bank that is a preferred SBA lender. Take your tax returns and copies of your own savings and checking accounts with you and see if you can get some kind idea of what type of loan they might be willing to entertain, on your behalf. Keep in mind that frankly, getting "pre-approved" is almost worthless. It is not until you obtain all of the seller's tax returns and other information that you can obtain some sort of bona fide understanding of your credit worthiness. It is never just about you! It is a combination of your credit capabilities, in combination with the credit worthiness of the business, itself. I do have some sympathy with the seller, in that he certainly does not want to spread his own tax returns around to unqualified people. And you owe it to yourself to understand what you are or are not capable of doing, from a financial perspective. By learning more about that process, you can best understand what your targets should be, if not this particular opportunity. If you are not qualified to acquire this business, you may learn what you need to do in order to prepare yourself for the next one.

Oct 10, 2016

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