How To - Finance Your new Business Purchase

When you have settled on the price, the question of how to finance the purchase will arise. There are a number of sources to approach if you need to arrange finance to complete the purchase.

Whichever organisation you approach, financing a business with a past track record of good profitability is much easier than financing one that is new or has a poor track record.

Many financiers such as banks, will arrange finance based on the asset value of the business, as well as its profitability, but may not include the goodwill portion.

One of the sources not to be discounted is an approach to the seller. Many sellers are happy to provide a portion of the financing to help with the completion of the sale, especially if the seller is retiring and does not require all the cash up front. The seller may require a solid repayment schedule, plus a good interest return.

The good thing about seller funding is that he/she is interested in doing everything possible to assist in the completion of a deal, whereas if you approach an outside funding organisation, their interest is mainly on what return they can get and what security is available for them to use. They ...

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