The entrepreneurial spirit is the true stimulus package that will get us through the recession. There are positive effects of the current economic conditions we are facing, one of those positives is the influx of individuals who have lost their jobs and are seeking the dream of business ownership. Small business is the backbone of our economy and there are many former employees of the corporate world who are rising to the challenge.
Before one starts to search for a business to buy there are a number of key points to have in order. When seeking funding all lenders or intermediaries will ask for the same basic financial package and you will save considerable time and energy having prepared the package electronically so you can submit the package with ease.
I have spoken with numerous underwriters and analysts, all having said that an electronic financial package is much easier to keep tabs on, review and faster to process.
The basic financial package will consist of the following:
• Past 3 years tax returns
• Personal Financial Statement
• Recent 3 months Bank Statements to show source of equity injection
After an analyst or underwriter reviews the financials of a borrower then a clear picture of what they can expect to secure for funds begins to develop. The prospective business buyer can then have a better understanding of what to expect for rates, term and likely required down payment. This information is critical to the business acquisition process as the buyer will be able to rule out certain businesses based on their individual borrowing capabilities.
Once a borrower has decided on a business they would like to purchase and have done their due diligence, the next step will be to put in an offer and move forward with securing the funds.
The next items the analyst/underwriter will want to review are:
• Sellers business financials (often times will want corporate tax returns)
• Year to date business interim profit & loss and balance sheet
• Your Business Plan (start this process as early as possible)
As you can see, the process of buying a business starts much earlier than you may think and requires a great deal of preparation to ensure a smooth process. There will undoubtedly be some bumps in the road and hurdles will appear that you don’t anticipate, but if you are properly prepared the process can and will be much more enjoyable.
About The Author: Jonathan Smith is a financing/loan broker, consultant who assists with SBA loans, conventional financing, and private lenders for business purchase financing. We works with business buyers, owner/sellers, business brokers, and agents. For assistance with business purchase financing options phone him direct at 888-859-9838.
Watch for more blog posts / articles from me in the future!
See all contributions from Jonathan Smith
Share This Blog Post
|
Print This Blog Post
Comments:
