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Is it possible to get a business loan with no money down?

I do have some money in retirement, savings and other accounts that I would use but I would strongly prefer not to use that money. I do own a house that it worth $20,000 more than I owe that I would be willing to use a collateral.

I do not have any experience when I comes to running a business, but the owner is willing to train for as long as needed. I also do not know if age would be a factor. I am only 26. My credit is good.

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Answers (7)
David Pullen
Allied Financial Group, Inc.
CA

John, with all due respect, you are not thinking creatively, or know all the options out there. A bar that is profitable and doing realtively good business does a TON of credit card processing. You don't need to pay 20pts. and 5K upfront to get these, though they have a 20-30% payback, it is all part of running the business, especially if you get in with a low out of pocket, and can increase the cash-flow.
Plus, if his credit is as good as he says, he can get $50-80K in unsecured creditlines under an LLC or corp (which he should have anyway) at 6%-9% interest. There are other options I didn't even mention and I won't here, because they are "outside" the box. To put the deal together though, you are right, he would need a cooperative seller that will be willing to carry a note.

Aug 17, 2011
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it would be highly unlikely. Bars are hard enough to get financed as it is. Unless you find a guy desperate to sell you will need a ton of money down. Most of the lenders will want big fees to pull it off.
If any lender is serious that they can do this tell them you will not sign anything until the loan is funded and tell them you won't pay any upfront fees. See how many responses you get after that.
TBH, 20k is nothing nowadays. In PA that wouldn't even get you a liquor license.
remember, IF somebody can get you this money, the terms and conditions would be so egregious you prolly wouldn't stand a chance of succeeding.
Just to give you an idea of hard it is to find a loan (at least a loaan that doesn't cost twenty points, a 5k upfront fee and high interest,) in 2006 when lending was great I could not get a loan to buy a biz. I had decades of experience, an 820 credit score and a little home equity. I ended up coming up with the money myself with cash, a 100k personal loan and maxed a couple of credit cards.
In my experience Don is way more correct than the other posters in this thread.
Good luck.

Aug 17, 2011
David Pullen
Allied Financial Group, Inc.
CA

There is more than one way to "skin" a cat, and you DO have some skin to put in. I am going to suggest 3 ways you can raise capital and if you want more details give me a call and I can go over them.
1. Use your good credit for for unsecured business creditlines (must be over 700 w/ 30-40% debt to credit limit ratio). The amount depends on how much credit you have and the number of open trades.
2. I can leverage your retirement (401k or IRA) with NO TAX PENALTY to invest in your business.
3. You can use the existing cash-flow of the business you are buying to raise capital (though it may take the seller's cooperation).
Bottomline is, you have some options if you are open to them. I can be reached at 909-949-6577

Aug 17, 2011
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The BAF Group LLC
MD

Seller, my sarcasm notwithstanding, I never said "never", as you seem to suggest in your own response. I said much as you did, but in much more brief terms.

One, exceedingly difficult question is, if you are coming into a business with nothing down, what do you have to support you with operational cash? The vast majority of businesses fail because of poor capitalization. Yes, in some rare terms, buying under these terms can be possible. But such a move makes such an acquisition far more likely that it will fold. While I sound cruel, your scenario can fill an unwitting individual with false hope and leading him to almost certain failure. Note, the original writer says he has no experience when it comes to running a business. How is he going to manage a situation such as you suggest with a lack of experience to back him up.

I am sorry to sound so cruel. But as a Business Broker, I have received far too many calls from people such as this writer who beg us to get them out of businesses in which they should never have involved themselves, to begin with.

Aug 15, 2011
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The Finance Store
Sarasota County, FL

Hello George,
I deal in funding for new business owners so I can help you out.
John Briches
Business Consultant

Aug 15, 2011
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Ignore the other guy. He is only 'right' if you buy a business the way everyone 'typically' buys a business. He means well, but is flat out wrong.

A business loan is strictly a question of loan to value ratio and how much 'skin in the game' you have. If you are willing to use your home as collateral, then you have skin in the game. If the seller is willing to carry back enough of the remainder, you can get a loan. Though unethical (and probably illegal), I have seen sellers sign a 30 day forgiven note for 20% of the purchase price. Let's say the buyer has no down payment but the seller trust their ability to repay. The seller wanted $800k, but instead makes the purchase price $1mil. The $200k increase takes the form of a 30 day forgiven promissory note. Let's say the seller is also willing to take another $300k promissory note that is to be repayed with standard terms. That makes the deal a $1mil sale with the buyer only needing a $500k note from the bank. If the loan to value is good, a lot of banks will take that deal and essentially the buyer put nothing down. After 30 days, the first $200k note disappears and the buyer only owes $800k. Make sense?

A word of caution.... these deals are rare and with good reason. Either the seller is desperate or the buyer is desperate. So you have to ask yourself why. Is the seller desperate because the business is about to fail? Or is it that the business is one no one normally wants, so he has to be creative to find a good buyer? Not many people want to own a business giving pedicures to homeless people, but if the business makes money, you can get a screaming cash flow. There are a lot of businesses like this. No one in 3rd grade says they want to retread tires when they grow up. But the cash flow to sales price of these businesses is usually very good.

At any rate, it sounds like you and the seller have a good relationship, so this may be an option. The seller will need to keep a watchful eye on your progress so he doesn't lose his investment. After all, you may lose your home, but you can still rent an apartment. He may lose years of his hard work that he can never get back, simply because he took a chance on you.

So in the end, the best answer may be 'yes, you can get a business loan with no money down'. But the less you put into the deal, the fewer takers you will find. Good luck! And never, ever let anyone tell you something is not possible.

Aug 15, 2011
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The BAF Group LLC
MD

I would never say never. But your chances would be better by buying lottery tickets each week.

At some point, one has to be reasonable. What you are seeking is simply no reasonable. Why would a business owner sell to you on that basis? Why would a lender offer to back you, in this circumstance?

Aug 14, 2011

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