Selling a Business with Owner Financing
Hoping to buy or sell a business during the credit crunch? Finding financing for a business sale can be a serious deal killer. Fortunately seller financing offers a solution to meet the challenge.
While some business buyers successfully obtain loans from banks and Small Business Administration (SBA) programs, many more are declined due to restrictive requirements. To facilitate a purchase, the seller of the business may elect to “be the bank” by accepting payments over time from the buyer.
When owner financing only involves the business, without any real estate as collateral, it is often referred to as a business note or business only note. The assets or collateral generally include furniture, fixtures, and equipment (FF&E) along with inventory, goodwill, and any other personal property.
If a seller prefers a lump sum of cash today rather than payments over time, they can sell the business note to a note investor. Pricing can vary greatly based on risk so it is important to understand how a note investor will evaluate the business note. Working with a knowledgeable business broker experienced with selling notes will assure the best terms and structure.
Looking for a real life example? Be sure to read Real Deal #141 to see how this solution worked for a Bagel Shop and Deli business in the Washington D.C. area. For more money saving ideas also read How to Create Business Notes for Resale.
Recipe for Success!
October 24, 2008 by Fred Rewey · 1 Comment
The stock market continues to retreat. Personal portfolios are dwindling. It is a “buyers market” in real estate. Banks, despite an unprecedented federal bailout, are tightening their lending programs so the average purchaser can’t obtain a loan.
This is the recipe the private mortgage industry was founded on – and it has returned. Read more
McCain and Obama Agree!
October 17, 2008 by Tracy Z · 3 Comments
If you watched the last Presidential debate Wednesday night you probably noticed that Barack Obama and John McCain agreed on at least one thing. The economy is in the tank and it needs HELP!
Now that we have found common ground for economists, Democrats, Republicans, and Independents alike, what can we do about it? And what does this have to do with seller financing? Read more
