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Loan To Purchase An Existing Business

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  1. #1

    Join Date
    Jan 2014
    Posts
    26

    Red face Loan To Purchase An Existing Business

    Hi guys. Need your wisdom and advice. A friend is selling his business and moving back to the US reluctantly (family reasons). The business is well established and has been in existence for 10 years. The audited financials are rock solid. He is offering the business to me to buy. The price he's asking would allow me to break even after 8 months (ie. Pay off the entire cost of purchase!). He is a good friend but needs the entire amount before he leaves because he is buying another business back home. Its a great opportunity and I'm very familiar with the business as it's in my field. What's my best way to secure financing for purchase?
    I have a steady salary job paying around $40k per month. I dont own a place but live at family home so rent is negligible (aka freeloading).
    I would be willing to pay even a higher borrowing rate because this opportunity is so solid. Please geo you're my only hope
    If someone can recommend a place that will approve a loan for me (not named Big Tony or Sal) and it works out, night of drinks on me!


  2. #2

    Join Date
    May 2006
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    Pampanga, Philippines
    Posts
    29,763

    Can your family not borrow from the bank?

    shri likes this.

  3. #3

    Join Date
    Aug 2006
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    7,517

    Or tax loans?


  4. #4

    Join Date
    Aug 2005
    Location
    Clear Water Bay (In Da Jungle)
    Posts
    9,968

    how much your looking to loan.

    Loads of financial companies out there loaning money, just go and talk to some of them.

    for example
    Public Finance Limited - Personal Loan


  5. #5

    Join Date
    Dec 2008
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    -
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    If you search on internet there are many ways of raising capital. Traditional ways such as banks, family and friends. Creative ones like crowd funding. It depends on the industry you are in and how much you want to borrow. Will you leave your 40k job to work full-time in the company?

    Are the "rock solid financials" done by a reputable accountant? The reason I ask is because your friend is asking for only 8 months of net profit. Even if he is in a hurry to leave the country the price is on the low side.

    shri likes this.

  6. #6

    Join Date
    Jan 2014
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    26

    Thanks for all the help guys. My brother will help a bit with the loan but he is not able to cover it all.
    I worked at the company for a year in the past and know the business well. The accountant is reputable and i am aware of the cash flow of the business and all the fixed costs. I will go full time into the business if i do end up purchasing it.


  7. #7

    Join Date
    Dec 2002
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    θ–„ζ‰Άζž—
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    Without assets it will be difficult to get a traditional lender to give you cash.

    If you are in F&B or retail take a look at GMF Group.

    Also a number of non traditional lenders out there. Was looking at a company called we lend the other day as they seem to be backed by Swire in some way.


  8. #8

    Join Date
    Jan 2008
    Posts
    1,966
    Quote Originally Posted by JSunnin:
    Thanks for all the help guys. My brother will help a bit with the loan but he is not able to cover it all.
    I worked at the company for a year in the past and know the business well. The accountant is reputable and i am aware of the cash flow of the business and all the fixed costs. I will go full time into the business if i do end up purchasing it.
    Your best solution is to find a partner, who is willing to finance for the share of the profit.

  9. #9

  10. #10

    Join Date
    Jan 2014
    Posts
    26

    Thanks for all the help fellas. Going to try a few of your suggestions!