Modern Business Purchase Financing Options: A Quick Guide

Modern Business Purchase Financing Options: A Quick Guide

Are you apprehensive about paying the entire purchase price for a business upfront? 

Don't worry—contemporary financing options are available that provide flexibility and make business ownership more accessible. Let's explore these options briefly:

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Seller Financing ("Seller Carry")

This is a prevalent practice, with approximately 90% of small business transactions incorporating some form of seller carry. At Transworld, we often structure deals with a 40% down payment and 60% seller carry, easing the financial burden on buyers. For instance, purchasing a $200,000 business would only require $80,000 upfront, with the remaining $120,000 financed over 3, 5, or 7 years at a 5% to 7% interest rate.

SBA Financing

The Small Business Administration (SBA) supports loans from traditional banks, providing an alternative avenue for financing. SBA-backed loans have stricter requirements, considering the buyer's credit score, personal resume, career background, and the nature of the business.

Business documentation is crucial for SBA approval, including three years of tax returns, profit and loss statements, the business lease, licenses, certificates, and a comprehensive business plan.

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Non-Traditional Lenders

A growing option, especially post-recession, non-traditional lenders cater to individuals who need quick cash and may face challenges securing a traditional bank loan. Many companies offer alternative financing solutions, presenting viable options for those with credit constraints or seeking a streamlined approval process.

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Thanks to diverse financing options, purchasing a business is more attainable than you might think. Consider your financial capabilities, and explore these alternatives with a Transworld Business Advisor business broker. 

Our experienced team can guide you through the entire process, helping you find a business that aligns with your financial goals. Schedule a consultation today to kickstart your journey to business ownership!