When it comes to financing a business you want to buy, I almost always use investors. However, the only problem is, investors won't finance anything smaller than a million dollars. And so, if you are wanting to buy a smaller business, you will have to find another way to finance it. One way the "so-called experts" out there (i.e. those who write books about buying businesses, but have never actually done it themselves) recommend is to finance a business through government programs like the Small Business Administration (SBA). Now, while I don't work on businesses that small personally, I have assisted people over the years with this, and if you go that way, youre going to find its actually easier to go to a bank and get the bank to give you a loan. If the business you want to buy makes sense, the bank will actually lend you the money on the same terms as you could get with government financing -- and it will be a lot less stressful on you. Unfortunately, what people "conveniently" leave out in their seminars or books about SBA loans is theres so much red tape and paperwork, its easier to just do it through a bank. Here's why: Lets say you get a million dollars in loans from the government. The business itself should be enough security on that, but what happens is theyre going to ask you to put up your house, your car, and everything else you own (except maybe for your kids, I suppose) as well. Its a very tough way to go. If you want to see for yourself, just go to the government and ask them for their sheets that you have to fill out and all the hoops you have to jump through to get that loan. In my opinion, it's not worth it. Just go to the bank. Or better yet, set your sights higher and buy a business worth a million dollars or more with investor financing. Believe it or not, it's actually faster, cheaper and less stressful than buying a smaller business anyway. |
