Funding The Purchase Of A Business
Different Ways To Fund Your Business Purchase
The different ways that a buyer can fund a business purchase include:
1. Cash – Buyers can use their own cash funds available to make the purchase.
2. SBA loans from local banks - Buyers can apply for SBA loans from their local banks. However, this can be fairly difficult to do as both the Buyer and the business must meet bank requirements.
3. Seller Financing (if available) – Buyer may be able to obtain Seller Financing whereby the Seller provides a Seller Carry Note on a portion of the purchase price to the Buyer.
4. Assume Seller Debt – Buyer can assume Seller’s debt such as credit card or equipment loan.
5. Alternative Financing Options – There are different alternative financing options available such as 401K/IRA redirections and buyer credit programs.
6. Any combination of the above options – Many transactions today will include a combination of the above as buyers typically want to reserve some of their cash as working capital for operations or to invest into the business.
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In the video above, Top Business Broker Adrianna Smith discusses the different ways that a buyer can fund a business purchase.
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