Business Financing for SBA Loans
Quantum Business Brokers assists with the financing of business purchases, specifically SBA loans, nationally. Business brokers, buyers, and owners are all part of the equation and Quantum works with all players to assist in SBA loan financing for business purchases. Usually these purchases range from $400,000 to $5,000,000. Over the last 15 years, thousands of business owners have taken advantage of Quantum’s assistance for SBA loan financing.
Buying a business with SBA loans is often the most significant part of buying a business. The reason why SBA loans are so important is because few business owners have the cash necessary to purchase a company outright and most business sellers do not want to owner finance. As a result, SBA loans are coveted among business buyers. The following suggestions will make it easier to receive an SBA loan to buy a business.
There are many considerations that are taken into account by the lender. This includes aspects of the business that will be purchased as well as the business owner. The following factors will greatly affect whether a lender will approve a potential borrower for an SBA loan.
Your Quantum representative will also be happy to go over these factors with you as well to increase the odds of SBA loan approval. Not to mention, all the paperwork and necessary documents will be provided by your Quantum Business broker
All you have to do is fill them out with your broker’s assistance. How’s that for customer service?
Potential business buyers will need to have anywhere from 10 percent to 30 percent for a down payment. The down payment may be comprised of home equity, savings, retirement/401k, a family gift, or the like. The money for the down payment may not be borrowed or charged to a credit card. If you are having problems with your down payment, your Quantum Business Broker will be happy to work with you and help you find a creative way to come up with the down payment. At Quantum we work for you and making your dreams come true.
Buyers approved for SBA loans have credit that is good to excellent. This means a credit score of at least 650. Any credit problems should be resolved well in advance of applying for an SBA loan. Credit checks are run on every SBA applicant for qualification purposes. If your credit is not perfect, your Quantum representative will work with you to help you improve your credit to increase your odds of SBA loan approval now or in the near future.
Those approved for SBA loans are typically individuals who are experienced in the industry of the business they intend to buy or at the very least have job skills pertaining to the business. Potential buyers with management experience have increased odds of loan approval as do previous successful business owners. Quantum Business Brokers will help you relay your life and job experience in a way that will look positive for an SBA loan approval.
All SBA loan applicants must provide a resume outlining their management experience and strengths in the industry they want to buy into. Quantum Business Brokers will happily review your resume and even help you create it to facilitate the loan process.
Potential business owners should create a solid business plan for the company they are interested in purchasing. Business plans are required by many lenders to ensure the borrower is knowledgeable of the business venture and has plans for the future. Not all lenders require business plans, but providing one will make you appear a lower loan risk. If you need help, Quantum Business Brokers have the answers you need when you are creating your business plan.
The business must provide positive cash flow or an adjusted net income that is capable of paying the loan payment as well as enough income for living expenses. The tax returns from the business being sold are reviewed carefully to ensure the best decision is made when it comes to approving or denying the loan. When interested in buying a business it is important to review the past tax returns as early in the process as possible to make a decision.
If you are a weak SBA loan applicant and have some real estate equity that may be used to guarantee the loan then it will strengthen the loan application. This is especially so for individuals with low credit scores, low down payments, or lack of industry specific work experience. Quantum Business Brokers are experts in this area and will be able to guide you through the process.
Lenders in are more likely to approve an SBA loan if the existing employees and management will remain employed. As a result, loan applicants should try and determine if existing employees will remain working for the company after the sale. Your Quantum Business Broker can recommend ways for you to discuss this.
Business buyers should include a training period from the seller in the purchase contract. This looks good to lenders who want to see a training period from anywhere as short as two months up to a year. The purchase agreement should be very clear relating to this point. Of course, your broker will be right by your side when it comes to creating the purchase contract.
If the seller is willing to take back a note, even a note that is as small as 10 percent to 20 percent, then the buyer has a better chance of receiving loan approval. If the seller is willing to owner finance a small portion of the business it shows confidence, which makes lenders more confident too. Quantum Business Brokers can work wonders when dealing with sellers and negotiating this aspect.
When applying for an SBA loan you will need to provide information on any other sources of income. This includes your spouse’s income, other income from businesses, rental properties, investments, and more. Tax returns for the past three years will also need to be provided.
The loan process is lengthy, but you can shorten it by returning all forms, information, and answering questions as quickly as possible. The faster the borrower acts the faster the lender can approve or deny the application.
All lenders have their own criteria pertaining to SBA loans. These criteria will also change as time goes on; so it is important to talk with a professional before applying for an SBA loan to ensure you are the best possible candidate before you try to make your purchase.