![]() ![]() Letter of Intent (LOI): This letter tells the lender that you’re formally considering buying the business and that you’ve been in communication with the owner.Business plan: If you plan on changing anything or running it as it already is, make sure it’s written here.Once you have this information in hand, you’ll need it to create a few new documents of your own to go along with your application packet: You want to know upfront if it’s a profitable business. It can seem like a hassle to ask the current owner for these details, but remember: this is a financial transaction, and to make a good business decision, you should know these details, too. At a minimum, make sure you collect these documents from the owner: These documents are sensitive because they contain financial details, so you may need to sign a non-disclosure agreement (NDA). Since you’re buying an existing business, you’ll also need to gather documents from the current business owner. List of personal debts, including amounts owed, monthly payment and payoff date.Financial statements for any other businesses you’ve run.Lenders will typically require these documents to evaluate your personal finances and past business history: This will help streamline the application process and make it easy to locate your documents in case you submit applications with multiple lenders. When preparing to apply for a business acquisition loan, it’s essential to put together an application packet of all of the documents lenders might ask for. Related: Business Loan Requirements: How to Qualify For A Business Loan 2. If you’ve run other businesses in the past, lenders may also want to see documents for these to see your business ownership history. ![]() Lenders will also expect a down payment, anywhere between 10% to 30% of the purchase price. Be prepared to demonstrate to lenders how you’ve worked in this industry in the past.įinally, lenders will want to understand your personal finances-how well you manage your own money can be an indication of how well you’ll run your business. ![]() If you’ve been a florist your whole life, for example, it might be hard to get a business acquisition loan to buy a structural engineering firm. Lenders may also want to see that you’ve had experience in the industry of the business you’re buying. The exact credit score you’ll need for getting a loan to buy a business varies by lender, but in general, a score of at least 680 will give you the best approval odds. Lenders will want to see that you have good credit. The only new thing coming into the equation is you. As long as it’s turning a profit, the business’ success is already proven, after all. In many ways, getting a loan to buy an established business is easier than getting a business startup loan. ![]()
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