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Business Purchase Finance + Down Payment Funding: Where to Start

You've found the perfect opportunity: an established business with a customer base already in place in a field you're passionate about. And it's for sale! But you're not sure if you can afford it.

What if we told you that it could be possible to have the entire purchase amount financed with little or no down payment required? It sounds too good to be true, but in certain instances, it is possible. Here's how.

100% Seller Financing

These days, it's commonplace for sellers to provide financing for a portion of the purchase price of the business. From time to time, you may come across a business owner who really needs to sell in a hurry. A business owner, under those circumstances, may be open to offering financing terms for the entire purchase amount.

Perhaps, the owner has decided it's time to retire and now doesn't want to wait a long time to start enjoying the retirement years. Look to buy a business that’s been available for sale for a long time, as these are the ones that are more likely to have an owner who is more eager to get it sold.BUSINESS PURCHASE FINANCE + DOWN PAYMENT FUNDING: WHERE TO START transworld minnesota

A word of caution: be sure to do your due diligence on the business and its current owner to be certain of its viability. While it isn't always the case, an owner who is willing to offer 100% financing may have doubts about its future success.

Other Business Purchase Finance Options

If 100% seller financing is not possible, you'll need to find another financing solution. In our previous blog entitled Buying a Business Financing: Where To Start, we covered some initial steps to take before seeking financing. Once those are done, you can apply for a bank or SBA loan. An SBA loan can cover up to 85% of a purchase price below $150,000 and 75% for those priced higher.

If you have seller financing in place for a portion of the selling price, your chances of being approved by a bank or another financial institution are much higher.

Down Payment Funding

If you have partial seller financing, a bank loan, or a combination of the two in place to buy a business, chances are it won't cover the total purchase price. If that's the case, you'll need to come up with a down payment to cover the remaining balance. If you don't have the cash readily available to cover the down payment, here are a few possible solutions that can help you get the funds to do it.

  • Access your retirement savings: through a rollover for business startups, you may be able to access funds in your 401(k) or traditional IRA without having to pay withdrawal fees for income taxes. To qualify, you need to have a minimum of $50,000 in the eligible retirement account.
  • Refinance your mortgage: if the value of your home is high enough and you have sufficient equity in it, refinancing your mortgage could generate the cash you need for the down payment. Alternatively, you can seek a home equity loan that uses your house as collateral against the amount borrowed.
  • Leveraging the business' assets: through the escrow company handling the sale and refinancing of the business, it may be possible to refinance the company's assets upon the closing of the sale, providing they are sufficiently valued.

Other options to consider include finding a partner or investor, selling some of your own assets like stocks, jewelry, or cars, and using credit cards or a personal loan.

Find an excellent variety of Minnesota businesses for sale on our current listings.

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Our Sellers except us to achieve the highest and best offer for their business while taking the least amount of their time away from it as possible. That is because the absolute best use of their time is to continue to run and grow the company.  If revenue or profits begin to decline, buyers will walk away or decrease their offer. Transworld's philosophy can be summed up in a ten step, how-to strategy that culminates with the sale of a company. This proven method has been used to sell hundreds of businesses.  Here are the steps. Step1 Comprehensive Business Analysis and Feedback As your business broker, the first thing in our how-to strategy is to analyze your operation, finances, market potential and industry trends. We take that information and advise you on steps to prepare your business for sale, and  generate a business profile that represents your company in the most attractive way possible. Step2 Sale Structure We identify the best possible price range to sell your company. This is based on solid facts, the condition of the market, projected growth, sales potential and the sale of similar businesses within your industry. Transworld’s experts apply sophisticated, time-proven valuation techniques to ensure that your price is appropriate for the current market condition. The price must not be too high or too low. Yet, it must represent an attractive investment potential for the buyer. Step3 Confidentially Network The Business For Sale During the selling process, we utilize the latest technology to present your company to other business brokers and strategic buyers all over the world. This greatly multiplies the effort in your favor. With Transworld Business Advisors, you have literally thousands of industry professionals confidentially representing your company to buyers.   Step4 Confidentially Advertise To Buyers Our aggressive marketing program ensures your confidentiality and provides maximum exposure for your company. Your listing is placed in various industry databases, Internet sites, and publications which are constantly updated. We spend more money in advertising and marketing for buyers than anyone else in our industry. Step5 Control The Information Flow We organize all necessary documentation and release information only as needed. We use limited information when advertising to maintain confidentiality. Buyers are pre-qualified and required to execute a confidentiality agreement before receiving any sensitive business information. Step6 Create Competition For Your Company We attract thousands of buyers, creating competition for your business. Buyers are qualified for financial ability to meet the offer, and we engage you with only the most qualified buyers. Once you meet the best of the buyers, we urge them to prepare and present all offers. We can continue to engage potential buyers on your behalf as negotiation on an offer is in process and have another interested party ready to go should a buyer change their mind. Step7 We Negotiate For You To Achieve The Best Price Appropriate negotiation is crucial to achieving your best price and terms. We have the expertise to establish sound and resourceful negotiating techniques on your behalf. Transworld has trained all of its agents in the art of negotiating through curriculum that we have created specifically for our industry. Never negotiate without planning, expertise, or from a position of weakness. Step8 We Provide Exceptional Support To You Through The Due Diligence Process We take pride in our exceptional service. Only half of the job is finding the right buyer who will pay your price and meet your terms. The other half is getting that buyer to the closing table. We quarterback the deal, work with the accountants, lawyers, banks, landlords, and other third parties that could jeopardize the success of the transaction. We realize that you depend on us to guide you through the sale of your business. We make the transition simple and easy for you. We know when an opportunity for you may arise and are always there to take advantage of it. We also know when someone is trying to kill your deal or is being unreasonable and how to handle those situations. Step9 We Are There From Beginning To The Closing We help manage all administrative procedures, licenses, inventory counts and lease assignments that may be required. Transworld works closely with your advisors to ensure a smooth transition. Using the latest technology, we strive to be ready to work on your behalf to get the deal done! Step10 We Are There For The Transitional Phase And Beyond! Because we are in the business community, you may want to consult us from time to time after the sale. We will provide you with the assistance after closing. Transworld will always remain in your corner! Schedule Consultation Now

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