To buy a business, you often have to put a certain percentage down – like buying a house. It is not common but under the right circumstances, it is possible to buy a business with no (or very little) money down.
There might be several reasons why you cannot put money down, some common reasons include bad credit, your money is tied to investments, you are low on cash flow or you do not want to risk your own money. In these cases, you might want to look into alternative financing options.
These options will vary for each buyer but some possibilities for 100% financing when buying a business include:
- 100% seller financing – As the name implies, this option is financing provided by the person selling the business. In this case, the seller is indirectly tied to the business because, as the buyer, you are making payments with cash flow from the business.
- Friends and family – Although it is tricky to ask family for money, this is an option when looking to buy a business.
- Leveraged buyouts – In this scenario, you leverage the assets of the business to finance the purchase. That said, the business has to be sold at a price lower than the value of its assets.
Although uncommon and albeit, a little difficult, 100% financing for a business is a possibility. If you are looking to buy a business with little cash for a down payment, contact your local Transworld Business Advisors team. Our business brokers can help determine the best route for your specific situation.