Business Acquisition Loan

Business acquisition loans can be a bit tricky to get funded. The secret is to know what is expected of you and how to sweeten the deal for the lender. Here are 3 tips you can use to prepare your loan request prior to visiting with your banker.

You will typically be required to have 15%-30% of the money needed to buy the business. This money should be cash in a bank account or investment fund. If you do not have enough cash to meet the down payment you can also try opening a home equity loan to make up the difference (a very common practice). The more “skin” or cash you have in the deal will increase your chances of getting the loan.

Although you will be required to put the 15%-30% cash down toward the purchase price of the business, your lender will also expect you to have about 3 months worth of working capital left over to fund operational expenses for the business. Most of the time this can be rolled into the total loan request which will limit the amount of cash you need at closing; however, having the cash on hand to meet this standard will make your loan request more attractive to the lender.

Industry experience will be required. Although the business could be “turn-key” your lender will require direct industry experience. You will need to demonstrate that you have the competence to run the business well. Without a couple years experience in the industry it will be difficult to get the money you’ll need.

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