About Financing

There are generally three different types of financing available to the Buyer.

1. Seller financing. Many purchases of small business are structured so that the Seller funds a substantial portion of the purchase price IF the Buyer gives the Seller a large cash down payment. This is the quickest way to close a transaction in that there is no lender involved, and thus no institutional requirements to be met.
A Buyer may also make an offer based on a combination of a down payment, a commercial loan, and a Seller's note.

2. SBA loans. Loans that are guaranteed by the U.S. Small Business Administration are a common source of funding for Buyers. Commercial banks and non-bank lenders both offer them. It is important to apply to an experienced SBA lender, as rookie institutions have difficulty fulfilling all of the SBA requirements on a timely basis. Also SBA lenders will lend on the cash flow of the business and not just the assets that can be used as collateral. Your Global Business Exchange Broker can refer you to several different lenders.

3. Commercial Banks. These institutions typically loan money to companies with plenty of assets as collateral, have an existing relationship with the Buyer, or are refinancing existing company debt. In general they are not amenable to loans under $1 or $2 Million.