Many individuals imagine an entrepreneurial future, but have found difficulties in raising finance as a deposit to purchase a new business, or to secure a loan from a bank or investor. Where you seek to get the seller to finance a 100% deal for you, you will need the advice of business brokers. Seattle can provide you with business advisers who will know which businesses are willing to finance the purchaser and see the opportunity to make profit out of the interest of lending the finance and selling the business at a good price at the same time.
Will Sellers Invest 100% In Your Purchase?
Purchasing an ongoing business gives you the advantage that after you have completed due diligence tests on the numbers, you will know the type of business you will be buying as well as understanding the financial arrangements. You will know what you can afford to pay per month for the debt owed to the seller. Your business brokers will be able to guide you to pre-existing small businesses, where the seller is willing to leave, but not necessarily have the need to withdraw all their finance.
This Is Not an Easy Purchase
Knowing the seller’s reasons for wanting to leave the business and yet not withdraw all their capital, is important if you’re to understand whether the deal can be completed sensibly. Where the business relies completely on the current owner, you may see a fall in turnover and profits immediately after taking over.
Any business person that requires the capital from the business to retire will not be able to loan the money back to you, unless they are confident that you will do well in the business and can make your repayments regularly and on time, effectively replacing the need to invest some pension fund money, for regular income.
Where a business owner has been running the organization for far longer than they prefer, they may be open to the idea of financing your deal, but only when the background checks have been completed successfully.
As you talk to business brokers in Seattle, you should be aware that some sellers may be pleased to offer 100% seller financing if the business is failing already, or close to ruin. They will expect to place the debt on you personally and not on a company that you create to run the business. This gives them the opportunity to chase you for the debt even when the business collapses.
Not every business is suitable for seller financing, especially when you require 100% of the money to purchase the business. Nevertheless, business brokers are looking to achieve success in deals and this type of arrangement may suit someone who already works in the business, knows and understands it and that the current owner trusts.