Financing for a Small Online Business
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Question:
I'm interested in buying a small but profitable online business. I would need to get an SBA loan to finance the purchase. The problem is that the business has only been in operation for about 9 months. Also, being an online business, it doesn't have any tangible assets. Do you think I will be able to get an SBA loan given these factors?
Answer:
Pardon my bluntness: No way! Sorry. The SBA 7(a) loan guarantee program includes specific financial requirements that the business must meet which this business does not satisfy. Most specifically, they require at least two years of tax returns to verify the financials. Insofar as assets are concerned, this is less of a worry as these loan programs require personal assets (i.e. home equity, marketable securities, real estate, etc) to guarantee the loan. In any event, the SBA is not the way to go on this deal.
However, this does not mean that the deal can't be done. Any seller of a 9 month old business has to understand that they will be required to provide financing for the deal or offer a significant discount for an all cash purchase. If this particular seller is not flexible in his/her terms, then chances are they will not sell the business, or they may sell to a very uninformed buyer.
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| Get more expert advice in Richard Parker's How To Buy A Good Business At A
Great Price - the most widely used reference
resource and strategy guide for buying a business. "I highly recommend this course to anyone even thinking about buying a business." - Dylan Garland President, BizQuest |
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Richard Parker author of: How To Buy A Good Business At A Great Price(TM), the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center. Richard Parker is also the author of BizQuest's Business for Sale Blog |