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What are my options for financing a business purchase?

I'm finding it difficult in today's market. Looking for options. Thank you.

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Answers (7)
Michelle Orr
Wells Fargo SBA Lending
Business Development Officer
Fairfield County, CT

While it may seem difficult for you to find financing, it is not impossible depending on the type of business you are buying, cash flow of the business, your relevant experience in the industry, down payment ability, credit score and available assets to secure the loan. I am a former national lender, with 10 years of experience in structuring and closing SBA and Conventional loans for small businesses. I own a commercial loan consulting firm and have numerous lender relationships nationwide. If you would like to discuss your request in detail, please call me. You may also visit my web site for additional information.
Best regards,
Michelle Orr

May 12, 2009
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Vested Business Brokers
Senior Business Broker
Suffolk County, NY

You have several options to finance a business.
1. Owner financing where you put a down payment usually 50-70%. Owner finances the rest.
2. SBA loan Seller must provide tax returns
3. Home equity loan
4. Loan from family members
There are other ways to be creative, but I don't know your situation. Feel free to call me to discuss. You can find me on our website under brokers.

May 12, 2009
Cory Hogan
P.C. Hogan & Associates
Helping the Small Business Buyer

Let me clarify a few points on bank financing.

The old days are gone where a buyer could get SBA-backed financing with 5% down and little collateral. This SBA backing is very important since it reduces – now by up to 90% - the amount of risk lenders have in a loan. So working within SBA requirements is very important. Contrary to the much publicized "credit freeze," I do see plenty of SBA loans getting done these days – but a buyer must approach the right bank the right way.

Without special permission, no more than 50% of an SBA loan can be allocated toward acquiring the "goodwill," or intangible assets of a business. And there are monetary caps. This makes purchases such as online businesses with limited or no equipment harder to finance. The SBA wants tangible collateral and will secure personal property if necessary. The business should have solid tax returns that show several years of positive growth. Buyers should have some experience in the industry of interest, and a credit score of 680+ is very important, if not mandatory.

After that criteria is met, the SBA is still looking for some additional security, and may require an additional seller note. As a result, I tell many buyers and sellers to plan on a 25/25/50 mix, where the buyer has 25% cash down, seller finances 25%, and the SBA-backed bank provides the remaining 50%.

If that criteria can't be met, the deal is not necessarily dead. More generous seller financing, non-SBA loans, friends and family, angel, and other sources are available. Sometimes these are the easiest places to start looking, as the SBA process is long and exhaustive (though the due diligence the banks are performing these days are often insightful to a buyer.)

Either way, getting through the financing process isn't easy today. You're best to work with somebody who has been through the process with success in the last 3 months.

Let me know if I can ever be of help!

Good luck,

Get the free report "Top 10 Critical Mistakes Business Buyers Make"

Apr 30, 2009
Steven St
World Business Partners, Inc
Los Angeles County, CA

If I were you I would put together the deal and either look for someone to partner with or go with seller financing. Money is out there but it takes a really good deal to get people interested. Traditional financing is pretty dry.

Apr 25, 2009
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Biz Capital Solutions
Henderson County, NC

I finance the purchase of businesses everyday. The economy has problems right now but there is money flowing if you know where to look. The problem most buyers run into is that most sources only offer one solution and you either fit that solution or they can not fund your project. We provide a free consultation if you would like to review your options. (800) 368-1498, Rob Ritch

Apr 5, 2009
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If you have a seller- financed business note, you can get cash by liquidating some or all of the remaining payments left owed to you, if you ever need to.

Apr 3, 2009
To Be Provided
Loan Officer / Investor
Hennepin County, MN

there are creative ways to do funding as well, not just through SBA, or venture capital, or or others who may be asking for up front money - which is not a good deal at all.

Depending on what your looking to acquire - as I am only willing to touch certain types of businesses - I might be able to help you - you don't even need to put money down - I would only take equity stake - and that's it. If you want, contact me through this email: - copy this message, and we can go from there

Apr 1, 2009

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