There are a number of key steps to buy a business when SBA-backed financing will be involved. The growing number of prospective business buyers, eager to find an alternative to corporate employment, will be in a better position to complete a well-financed deal if they learn some of those steps. Among the most important are:
1. Seek pre-approval for a business purchase loan from institutions in the SBA lender network. In the process of asking for funds and demonstrating a track record of paying financial obligations on time, the prospective purchaser/borrower will learn roughly the size of the loan for which he’ll qualify, and will have a chance to conduct some comparison shopping among lenders, looking for the best deal as to interest rate and other loan terms.
And the applicant who pre-applies will find out if there are any weaknesses in his application that can be corrected right away, before he’s found a business to buy and is submitting the request for funds to make the deal.
2. Learn to write a business plan. The prospective borrower who’ll ask SBA-backed lenders for the funds to complete a deal will surely be required to submit a business plan. This document will help to demonstrate the applicant’s knowledge of the industry served by the business he’s ready to purchase. As an exercise, it will give the business buyer valuable insight about what he needs to know and what he’ll have to communicate in order to get an approval for his application,
3. Find out about any weaknesses in business background or the business plan; any extra skills, such as business accounting the applicant can begin to learn in order to strengthen her case for receiving the business purchase loan.
4. Another of the important steps to buy a business with help from an SBA lender will be having a team of professionals in place; people who’ll provide valuable aid in finding and negotiating for a business--a business broker, an accounting expert who will be called upon to help with due diligence, perhaps an appraiser to help confirm whether a business offering is priced correctly.
One professional who belongs on your team is a loan specialist. Working with a skilled specialist is a lot easier than trying to negotiate the world of business loans by oneself, not knowing which institution is making the kind of loan needed, what its officers are looking for and how to “package” an application so that it appeals to the lender. And making a persuasive case to the right lender for the money needed is among the most critical steps to buy a business.
About The Author: For over 25 years Peter Siegel, MBA has provided niche business purchase financial advisory and loan broker services with SBA Loans, Non-SBA Loans, Retirement Plan Conversions, Hard Money, Gap/Bridge Financing, Note Restructures, etc. He assists with financing for: Business Purchases, Business With Real Estate Purchases, Franchise Resale Purchases, New Franchise Purchases, Pay Off Existing Seller Notes, Partner Buyouts, Employee Buyouts. Peter Siegel can be reached direct toll free at 888-983-1632 regarding getting professionally pre-qualified, advisory & loan placement services.