| Buying a business opportunity is likely to be an | | | | business is routinely higher than the cost of a |
| extremely challenging task when arranging the | | | | commercial property loan. |
| business loan. This is largely due to the usual lack of | | | | Business Loan Down Payment Requirements for |
| commercial property as collateral for the business | | | | Buying a Business Opportunity |
| financing to buy a business opportunity. When buying a | | | | Although there will be variations based on the type of |
| business that does not include commercial real estate, | | | | business and several other factors, a common down |
| business borrowers need to realize that business loan | | | | payment requirement for a commercial loan to buy a |
| options will be greatly reduced in comparison to a | | | | small business opportunity is 20-25 percent. The |
| business purchase that can be financed with a | | | | presence of seller financing might lessen the down |
| commercial mortgage. | | | | payment needed to acquire a small business |
| The suggestions and advice in this commentary build | | | | opportunity. |
| upon commercial loan covenants that are commonly | | | | Buying a Business Opportunity - Business Loan |
| provided by commercial lenders willing to offer | | | | Refinancing Options |
| commercial financing throughout much of the United | | | | A related business loan issue to anticipate when buying |
| States for buying a business opportunity. There will | | | | a business is that refinancing the business opportunity |
| often be various private financing scenarios in which | | | | loan terms will normally be even more difficult than the |
| the seller might be willing to wholly finance a business | | | | original business financing. There are currently some |
| opportunity acquisition, and we will not attempt to | | | | new business loan programs in the final stages of |
| discuss those commercial loan possibilities in this | | | | development that could dramatically improve future |
| commentary. | | | | refinancing options. But until these new business |
| Length of Business Loan to Expect When Buying a | | | | financing options are finalized, it is important to arrange |
| Business Opportunity | | | | the best possible terms initially and not depend upon |
| When purchasing a business opportunity, commercial | | | | refinancing possibilities. |
| loan terms will almost always include a reduced | | | | Avoiding Problem Lenders When Buying a Business |
| amortization period in comparison to a commercial real | | | | Opportunity |
| estate loan. A business loan term of ten years is | | | | The selection of a commercial lender might be the |
| normal, and that length of loan is likely to be tied to a | | | | most important phase of the business financing |
| requirement that the commercial lease will not expire | | | | process for buying a business. An equally important |
| before the loan matures. | | | | task is avoiding lenders that are unable to finalize a |
| Likely Business Loan Interest Rates to Buy a Business | | | | commercial loan for buying a business. |
| Opportunity | | | | By avoiding such lenders, commercial borrowers are |
| The likely range to buy a business opportunity is 11 to | | | | likely to avoid many other business financing problems |
| 12 percent in the present commercial loan interest rate | | | | frequently associated with buying a business |
| circumstances. This is a reasonable level for business | | | | opportunity. Avoiding problem lenders will be |
| opportunity borrowing since it is not unusual for a | | | | instrumental to the eventual success of both the |
| commercial real estate loan to be in the 10-11 percent | | | | business loan process and the long-term financial |
| area. Because of the lack of commercial property for | | | | health of the business being acquired. |
| lender collateral in a small business opportunity | | | | Copyright 1995-2007 AEX Commercial Financing |
| transaction, the cost of a business loan to acquire a | | | | Group and Stephen Bush. All Rights Reserved. |