Why Offering Seller Financing In A Booming Economy Is A Good Idea

 

If you are considering selling your business, then you probably know what a complicated process it is can be.

 

The best way to successfully maneuver the path to a closing table is to be very flexible, and this flexibility is pivotal when considering whether or not you should offer seller financing.

 

Sure, the economy is currently booming. If you were trying to sell your business back mid-recession, then offering seller financing was an absolute must as traditional lending disappeared and most buyers didn’t come with fist fulls of cash.

 

Now there are more cash buyers in the market than there have been in recent years, which is terrific news – but if you limit your buyer pool to only those with all-cash offers, you won’t be doing yourself any favors.

 

Why?

 

Flexibility. Not every business is right for every buyer, so limiting your pool of buyers right out of the gate may keep you from selling your business quickly (if at all). This is especially true if you have a niche business that will have a hard time attracting a huge number of buyers anyway.

 

Also, a seller who demands an all-cash offer typically gets only 70% of their asking price in the end, while a seller who is open to the idea of seller financing gets somewhere in the mid to high 80’s. Do you really want to miss out on 15% or more?

 

Increasing your buyer pool by offering seller financing as an option also means you may have the opportunity to choose from multiple buyers and multiple creative offers – thereby creating a chance to get the best return on your business you possibly can.

 

Yes, we would all love full-price, all-cash offers that land on our desk the day our business hits the market, but in reality a flexible seller is a seller who will actually make it to a closing table.

 

Talk to your business broker about what amount of seller financing they think would be appropriate and what you are comfortable offering. Listen with an open mind to any offers that come in from buyers who are asking you to finance part of the deal. In the end, it is still up to you whether you take an offer or not – just keep your options open throughout the process.

 

Are you considering offering seller financing for your business and want to know that the terms of a typical deal look like? Do you have more questions about how much of a deal you should finance? Ask us! Please leave any questions or comments and we will be happy to assist you.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

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Need Capital? Business Buyers & Seller Financing

Seller financing can make small business deals possible, as it allows buyers (who don’t have all the capital necessary or who are unable to raise funds through more traditional lending sources) the opportunity to buy a great business.

 

 

 

Our economy is in much better shape than it was during the recession, and as such the business market has changed. In the midst of the recession nearly all deals came with a fair share of seller financing as traditional lending was essentially nonexistent and any buyers in the market weren’t flush with cash. This was great news for buyers as they could consider businesses that would have otherwise been out of their range.

 

Now that the economy has dramatically improved, the tides of seller financing have turned.

 

First and foremost, the improved economy means there are more cash buyers coming to the table that will directly compete with those who need a seller financed deal. In terms of recently completed deals, seller financing still holds as a close second to cash, but now buyers need to come with at least 50% down if they hope to compete with other buyers and get a deal to closing. There are, of course, exceptions to this rule as every business deal is different – but the days of financing more than half of a transaction are probably gone for good.

 

It is also easier now than it was just a few years ago to get more traditional bank financing or a SBA (Small Business Administration) loan, but many financial institutions are still gun-shy about risky small business deals as the memories of the recession are still relatively fresh in everyone’s mind.

 

What if I can’t get a bank loan and the business that I’m interested in doesn’t qualify for a SBA loan? How can I get seller financing?

 

If you are interested in seller financing, let your business broker know as it will help in narrowing your purchase options. Your broker can look for business sellers who have indicated they would be open to a deal that includes some seller financing. Next, you need to be prepared to offer at least 50%, if not more, of the purchase price up front if you want any seller to take your seriously. No one is going to finance 100% of the deal or anything close to it.

 

Do you have more questions about financing options for the purchase of a small business? Would you like to know what the terms look like for a typical seller financed deal? Contact us today or leave us a comment or question here. We would be happy to help!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

 

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Veteran? Why Small Business Ownership Is For You

Veterans make great business owners.

 

Your military career trained you for leadership, taught you discipline and gave you the mental endurance to put in the hours it takes to get something done. Guess what? Those are the skills and qualities great entrepreneurs need.

 

 

I’ve never owned a business before. I wouldn’t know where to begin.

 

We’ve got good news – you don’t have to start from scratch. There are a myriad of small businesses for sale, and there’s a good chance that you will be able to find one that fits your goals and one in an industry where you have some practical experience. Buying a business means you don’t have to start from the ground up. You get a fully operating business, complete with employees, equipment, inventory, operating procedures, vendor contracts – you get the idea. You can walk in on day one and be the owner of a business instead of starting with nothing more than an empty space.

 

Am I qualified to own a business?

 

Yes, absolutely! Many of the training programs and careers within the military transfer very well as the experience and practical knowledge needed for many industry sectors in the small business community. The type of business and industry sector that will be right for you will depend a lot on what jobs you did both before and during your time in the service as well as what you hope to get out of business ownership. Love working on cars in your spare time and spent your military career as an aircraft mechanic? Maybe an auto shop is for you. Looking to spend as much time as possible with your family? A bar or restaurant that will need your attention 7 days a week probably isn’t the best choice. Talk to a business broker about your goals and your experience – you might be surprised by the businesses that would meet both.

 

 

I don’t have a lot of money, how much money does it take to buy a business?

 

It depends. There are very small businesses that won’t cost much and larger businesses that run in the millions. The good news is that as a veteran you have special access to programs from the U.S. Small Business Administration (SBA) that can help you get the funding you need to buy a business (click here to learn more!). Talk to your business broker about what SBA programs you might qualify for and what businesses might qualify for SBA lending. If SBA financing is out of the question, many sellers will offer seller financing to the right buyer with a decent down payment.

 

Although it might seem like a daunting idea, small business ownership is very possible for veterans. Talk to a business broker today to explore your options and get you started on the path to entrepreneurship!

 

Are you a veteran and have questions about what SBA programs you would qualify for? Would you like to know what types of businesses would suit your goals and experience? Ask us! Please leave questions or comments here and we would be happy to help. Thank you for your service!

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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What You Should Know – Selling Your Business: Do I Have To Finance The Sale Of My Business?

Why Is Seller Financing So Important To The Sale Of My Business?

 

Surveys have shown that a seller, who asks for all cash, receives on average only 70 percent of their asking price, while sellers who accept terms receive on average 86 percent of their asking price.  That’s a difference of 16 percent!  In many cases, businesses that are listed for all cash just don’t sell.  With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases.  Most sellers are unaware of how much interest they can receive by financing the sale of their business.  In some cases, it can greatly increase the amount received.  And, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.

 

Are you considering selling your business but are hesitant to offer seller financing? Do you have questions about how seller financing would work? Please leave questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

https://infinitybusinessbrokers.com

 

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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