Business Loan Strategies to Buy a Business Opportunity

When buying a business opportunity that does notBUSINESS OPPORTUNITY BUSINESS LOAN
include commercial property, borrowers should realizeSTRATEGIES:
that business loan options will be significantly differentDown Payment Expectations to Buy a Business
when compared to a business purchase that can beOpportunity
acquired with a commercial property loan. ThisA typical down payment for business financing to buy
problematic situation occurs because of the normala business opportunity is 20 to 25 percent depending
absence of commercial real estate as collateral foron the type of business and other relevant issues.
the business financing when buying a businessSome financing from the seller will be viewed as
opportunity. In terms of arranging the business loan,helpful by a commercial lender, and seller financing
efforts to buy a business opportunity are almostmight also decrease the business opportunity down
always described by commercial borrowers aspayment requirement.
excessively confusing and difficult.BUSINESS OPPORTUNITY BUSINESS LOAN
The comments and suggestions in this report reflectSTRATEGIES:
business financing conditions that are frequentlyRefinancing Alternatives After Buying a Business
offered by substantial lenders willing to provide aOpportunity
business loan to buy a business opportunity throughoutA critical commercial loan term to expect when
most of the United States. There are likely to beacquiring a business opportunity is that refinancing
circumstances in which a seller will privately fund thebusiness opportunity financing will routinely be more
acquisition of a business opportunity, and it is not ourproblematic than the acquisition business loan. There
intent to address those business loan possibilities in thisare presently a few business financing programs being
report.developed that are likely to improve future business
BUSINESS OPPORTUNITY BUSINESS LOANrefinancing alternatives. It is of critical importance to
STRATEGIES:arrange the best terms when buying the business and
Buying a Business Opportunity - Length of Businessnot rely upon business opportunity refinancing
Financing to Anticipatepossibilities until these new commercial financing
Business financing conditions to buy a businessoptions are finalized.
opportunity will frequently involve a reducedBUSINESS OPPORTUNITY BUSINESS LOAN
amortization period compared to commercialSTRATEGIES:
mortgage financing. A maximum term of ten years isBuying a Business Opportunity - Lenders to Avoid
typical, and the business loan is likely to require aThe selection of a commercial lender might be the
commercial lease equal to the length of the loan.most important phase of the business financing
BUSINESS OPPORTUNITY BUSINESS LOANprocess for buying a business. An equally important
STRATEGIES:task is avoiding lenders that are unable to finalize a
Expected Interest Rate Costs for Buying a Businesscommercial loan for buying a business.
OpportunityBy eliminating such problem lenders, business
The likely range to buy a business opportunity is 11 toborrowers will also be in a better position to avoid
12 percent in the present commercial loan interest ratemany other business loan problems typically
circumstances. This is a reasonable level for businessexperienced when buying a business. The proactive
opportunity borrowing since it is not unusual for aapproach to avoid problem lenders can have dual
commercial real estate loan to be in the 10-11 percentbenefits because it will contribute to both the long-term
area. Because of the lack of commercial property forfinancial condition of the business being acquired and
lender collateral in a small business opportunitythe ultimate success of the commercial loan process.
transaction, the cost of a business loan to acquire aCopyright 2005-2007 AEX Commercial Financing
business is routinely higher than the cost of aGroup, LLC. All Rights Reserved.
commercial property loan.