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Is it possible to finance goodwill?

I was looking to buy gas/convenient/liquor store and the goodwill they are asking for is around $800k. I can squueze about $375k. I needed financing on the rest and the seller is only willing to finance $75k. How can I go about getting the rest of my financing done? SBA, Private Lender or personal bank(asks for collateral) which I dont want to do. Thank you for help.

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Answers (5)
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Jun 1, 2017
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Thank You. David Collins. Thats what I thought but he has shown me the books and looks great. I have stayed inside and outside the store for unaccountable times and hours and it is busy. He is stating he needs that amount of money to start another business. Precisely Big Hotel business and the hotel requires major renovations.
How tough is it to get a SBA loan; especially for good will?

Sep 4, 2009
David Collins
Glentyde Capital Advisors, Inc.
CEO / Owner
Mecklenburg County, NC

It's always been the case with small buyouts that seller financing is usually a significant component of the deal--and that's even more true in today's credit-restricted climate. If this seller is only willing to leave 75K at risk for a time, it calls into question the seller's confidence in this C-store's actual earnings capabilities. In turn, that raises the issue that maybe the goodwill element is overpriced. (The value of goodwill, after all, is driven directly by the expected earnings of the biz.)

That's not to say that there's never a good reason for a seller to be disinclined to extend significant credit in the buyout--other than a lack of confidence in the biz itself--but it certainly behooves you to vet the deal even more carefully to make sure the seller's motives are something other than a lack of faith in the biz going forward.

Sep 4, 2009
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Thank You. Douglas Baumwall for your response. How about alternative methods? I was just thinking what if I showed the lender the companies books. What if I showed them the owners net? Are there any other options? Does anyone know about the SBA preferred lenders program?

Sep 4, 2009
Doug Baumwall Licensed Business Intermediary
Collins & Collins Investments
Licensed Business Intermediary
Miami-Dade County, FL

It is possible to finance goodwill, however, it's now more difficult than it was just a year ago. It sounds like you're looking for non-recourse financing, which is even harder to find. Non-recourse financing is generally not available for goodwill because goodwill is intangible and very fragile. If you were a lender, wouldn't you want borrowers to be responsible for repayment? That's why personal guarantees are required.

Sep 4, 2009

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