Finding the perfect business to purchase is not an easy feat. However, acquiring a loan to officially buy the business is often the most trying part. Before a bank approves a loan, you and the business have to meet some high standards. Since every case is as unique as the business itself, there are three main loans to consider when attempting to purchase an existing business.
1. SBA Loans
SBA loans are those approved by the Small Business Administration. These loans are ideal because of their long-term repayment options and lower interest rates. These loans are considered one of the best loans for purchasing an existing business and are offered at most banks.
The downside, however, is that these loans (because of their popularity) can be difficult to qualify for and can take anywhere from 45 to 90 days for processing.
2. Seller Financing
This type of loan is, as the name suggests, one where the current owner of a business agrees to finance a portion of the purchase price. Sellers who are willing to finance are often doing so for at least 15-60% of the listing price. With this help, the buyer is more likely to acquire a loan more easily for the remaining balance.
3. HELOC & HEL
Home equity line of credit (HELOC) and home equity loans (HEL) are a good option if you are willing to put your home at risk for the business you are about to purchase. A recent report noted that of those who recently applied for the HELOC, 68.4% were approved.
While a HELOC is a credit line you can constantly draw from until you hit the limit, HELs are a one-time loan where you receive all funds upfront. Depending on your needs and specific situation, one of these two loans might be right for you.
Transworld Business Advisors Houston is well-equipped with skilled brokers who have extensive experience with business loans. With these three options being great ones in general, it is possible one might be more suitable for your unique situation than another. With the guidance of a Transworld Houston advisor, you can make an educated decision that is not only right for you, but also for your new (existing) business.
Contact Transworld Business Advisors Houston today for a consultation!