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Accounting & Finance

How To Find Financing When Buying a Business

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Did you know it only costs a few thousand dollars to start your own business? While starting your own business might not be very expensive, buying a successful business can cost a lot more and require financing.

Buying a small business that already has a customer base and is profitable can oftentimes be a lot easier than starting on your own. However, creating a startup or buying a business requires investment.

With a startup, you may start selling and earn an income before you need to borrow funds. When you buy a business unless you’re using your own money for the purchase, you need to learn how to get the money from a lender.

Continue reading this article to learn how to find financing to buy the business you want.

Bank Loan

If the business you want to buy has a good track record, getting a bank loan might be possible. The more well thought out the plan is and the more proof you have that the business will continue to be profitable, the more likely it is that you’ll be able to secure the loan.

Before going to the bank, make sure you have all the numbers and proof of your business’ past success. Also, be sure to bring a detailed description of what you plan to do with your business in the future after the transfer of ownership.

Angel Investors

Don’t take the name of angel investors to mean that you get free money. Angel investors often look for early-stage businesses to invest in and want a big chunk of the profits. If you want to buy and run a business that is in the early development stages, you might consider speaking to some angel investors.

Look for investors that have expert knowledge in your field. Money is great—and necessary—but it’s even more important that you have the knowledge to run the business and continue its success.

Working with an investor with money and know-how is an ideal situation.

Asset Financing

If you are buying a business that has a lot of land or expensive equipment, you may be able to use asset financing to buy the business. You can also use leasing to get the equipment that you need, so you have money available for the purchase.

People that already own another business may also be able to use asset refinance to get money to buy the new business.

Seller Financing

If a bank won’t loan you money and you can’t find other ways to finance your purchase, you shouldn’t despair. Many business owners want to stop owning their business and would be happy to help with your financing to buy a business challenge.

Keep in mind that you won’t find anyone that will finance at 100%. The higher the number you have for a downpayment of the business, the more likely it is that they will be willing to let you make payments directly to them through seller financing.

Buying a Business and Building an Empire

When you’re buying a business that is already successful, you can get around years of hard work. Someone else already did that mindnumbing and treacherous work for you.

With the information above, the financing roadblock is no longer in the way. You can buy the business of your dreams using a method of your choosing.

Your next financing step may be to raise funds to expand your operation and one way you can do that is by selling shares. Or you can once again present your revised business plan to lenders.

Do you want to learn more about financing and other business topics? We have articles that can help. Check them out today!

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