If you are in the market to purchase a business, there are was to make these investments without collateral. As a business broker in Florida can help walk you through the full process when you contact Rockrose Realty. In the meantime, let us walk you throw a few need-to-know details about how you can buy a business without putting anything down upfront.
Here are a few ways you can buy a business without collateral:
1. Try an SBA
An SBA is a small business loan that are guaranteed by the SBA (Small Business Association). They are issued by participating lenders, which are typically banks. SBA’s can give out 85% of 150,000 or less and 75% of loans of more than 150,000. So the larger your business is, the more money you will need. If you are interested in absolutely zero collateral, take a look at the SBA’s 7 (a) program. It’s an incentive to bank lender to give out loan to prospective buyers. Plus, you are able to obtain 75% of the loan amount.
You may have to put up 25% of the money in order to buy the business. However, if you are able to get that money for potential investors or as a gift, then the SBA’s 7 (a) program is going to be an ideal route. It will cost you the least amount of money and has the potential to be collateral-free. This is a great option for first time business buyers.
2. Purchasing a Business with Seller Financing
When you are looking to buy a business, an option that can guarantee you with no collateral is seller financing. Seller financing is a real estate agreement where the seller handles the mortgage process instead of a bank or some other financial institution. Having a seller offer or agree to financing is not unheard of. Depending on the seller’s situation and how fast they would like to get their business sold, a seller may agree to this. According to The International Business Brokers Association (or the IBBA), 33% of brokers are looking to sell due to retirement. In cases such as this, it becomes more like that they will agree to financing. Talk to one of our business brokers in Tampa about the option to potentially combine the SBA 7 (a) program with seller financing.
There are a few downfalls to combining these two types of financing. If you are able to indulge in the SBA 7 (a) loan, the seller will not be able to receive any payments for two years. Understandably, you and your broker will have to work creatively in order to get the seller to agree to this financing. Providing an incentive of some sort is one way you can justify the seller deferring payment for two years. Your business broker in Florida can tell you a few options for this type of deal.
Attempting to purchase a business without collateral may seem like a daunting and unlikely task. But these types of deals happen daily. Talk to a business broker in Florida will walk you through all of your options that will leave you with little to no collateral. Contact Rockrose Realty today! We are dedicated to making your new purchasing endeavor a pleasant experience.