Business Acquisition Loan
Have you attempted to purchase a business and you had a decent down payment but, could not qualify for financing? Is your seller motivated, and would they allow financing based on business assets? We may have a financing option for you. The business acquisition bridge loan is not based on your credit and your collateral, it is based on the cash flow of the business you are buying. This bridge loan helps you to buy and operate your business today while you build your financial profile to qualify for conventional long term financing.
Business Acquisition Bridge Criteria
These are the main factors the underwriter will review in our Business Acquisition financing.
- Down Payment – You must have at least 20% of the acquisition costs as a down payment. The funds are not sourced or seasoned, but are simply verified prior to closing.
- Experience – You must have at least 5 years in related experience. For example, if you are looking to purchase a restaurant, you should have had 5 years in the management or ownership of a restaurant.
- Seller Second – The seller is willing to carry a note for up to 60% of the purchase price.
- Cash Flow – The Bridge loan is based on the cash flow of the business. In reality it is a revenue advance not a loan. In essence the current owner is acceting as partial payment for their business future earnings ofsaid business.
The Terms of Bridge Loan
The amount of the advance and term of the advance is based on the financial strength of the borrower and the cash flow of the business. Therefore, every business will not get the same amount for a similar purchase price and credit profile. This is a matching loan program, and the purchaser can qualify up to the amount of their down payment assuming the cash flow of the business can support the payment. This is short term financing. The term is usually for three to six months. At the end of that term, if you need to you may qualify for additional financing.Optimally the business will qualify for long term financing.
Who Could Benefit From The Business Acquisition Bridge Loan
This is a niche program for business owners who want to sell and the buyer can not qualify for conventional financing immediately. Therefore, there are many situations and people whom the bridge program will help. They include, but are not limited to:
- Seller Ready to Retire
- Seller Ready to Relocate
- Seller to Family or Friends
- Seller to Business Partner
- Buyers with Down Payment, but not perfect credit.
- Employees who wish to purchase the company.
These are a few situations where the Business Acquisition Bridge Loan Program would be an means to finance the sell a successful business.