Over the past few months one of the most challenges aspects of acquisition financing to overcome has been fulfilling the
Global Cash Flow requirements. In years past most lenders would look at an acquisition to see if the business itself could support the debt being taken out for the purchase, support the ongoing business expenses and they really didn’t look at the other financial obligations of the new owner.
As we all know, things have changed significantly in the current lending climate. When a lender reviews an acquisition purchase today, they look at the full financial picture of the borrower, hence,
Global Cash Flow. The lenders will review not only the cash flow from the business but will want to know if the owner will have any outside income. Often times a new owner will not consider keeping their current job, many feel the lenders want to see them leave their job to run the business on a day to day basis. However, this is not always the case, sometimes keeping your current job can be the difference in whether or not the loan will be approved.
When shopping for different opportunities it is very important to assess the entire picture. For starters, write down all your personal expenses and determine what you need to make on a monthly basis to meet your obligations. When seeking a business, look at the cash flow to ensure the business meets your personal obligations, the business operating expenses and the new debt you would be taking out on the loan. If it looks like the business doesn’t meet those needs and you have no passive recurring income you should consider your options. Determine whether you can keep your current job and still oversee the business being purchased or talk to an expert to help you determine what businesses may be right for your situation.
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!
Posted on October 26, 2009 | 
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