Buying a Business, Even Without Collateral, Can Be Easier Than a Start-up

Buy a Business With No CollateralSource: www.forbes.com
“When Alex Livingston and his business partner Eddie Santillan decided to buy a small business from a retiring owner after graduating from Harvard Business School, they decided to get a bank loan. They were looking for a business that had $5 million to $30 million in annual revenue and had $1 million to $3 million in profits. But, like many young recent graduates, they had no collateral.

 

That didn’t prevent them from securing a SBA 7(a) loan from Exchange Bank in Santa Rosa, Calif., for several million dollars to buy a local facilities maintenance firm from a retiring owner in May 2014. The loan accounted for …”

BizBuySell’s Insight:
Many entrepreneurs would like to own their own business someday, but don’t believe they can obtain the financing. Yet, many lenders would prefer to offer financing for the purchase of an existing business, as opposed to a start-up.

 

A well-established business with strong revenues and healthy cash flow makes good financial sense. And, not only are many sellers willing to carry a percentage of the financing, many lenders are given incentives to offer SBA 7(a) loans to entrepreneurs for the acquisition of an existing business.

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