Selling a business takes time - talking to many potential business buyers, and knowing the right resources to close a deal. One of the most important things a business owner/seller, agent or business broker should do is pre-qualify the business for SBA loan business purchase financing for business buyers before they put the business on the market!
Most owners/agents/brokers usually response to this with, "why should I do that since it's the buyers responsibility to get the financing." If owners/agents/brokers only knew how long it can delay the process if buyers don't go to the right financial institution/lender, valuable time that you can't afford when other potential buyers are interested in buying the business!
When you get pre-qualified for financing it tells you several things about selling the business. First, if there is real potential for a buyer to get financing -- so they can cash the seller out and they don't have to take back a note, or that no business buyer has a chance to get financing based on your financial and tax information and that you'll know you'll have to take back a note.
It is good to know your options upfront before the negotiating starts on possible deal structures! Second, you'll find out if the selling price is within the ballpark according to different lenders. No lender will loan on a business purchase if they feel the "ratios are not in line" with the selling price - a good indication if you should lower the asking price of the business.
Getting pre-qualified is simple. Submit the following info to several qualified lenders for review:
3 years business tax returns and financials (Profit & Loss Statement, Balance Sheet). Let them crunch the numbers and see if there is potential there for the right buyer to get financing based just on this information. Other factors are very important and need to be considered later like the buyer's credit, work experience, down payment, collateral etc.
When I consult with sellers, agents and brokers this is one of the first steps I take when looking at the whole picture of selling a business. This process also really helps determine pricing and the structure of the deal, and what alternatives can be played out when the business hits the market.
In getting prepared for financing you eliminate the buyer going to financing who may take too long, are not competent, or plain too busy for your deal. Remember time kills deals and you want to keep your deal moving - and stay in control of the deal.
Since a high percentage (70%) of California businesses for sale don't sell, this is one area you have control over as a owner/agent/broker when selling the business, and should take full advantage of before you place the business on the market to sell!
About The Author: Peter Siegel, MBA assists business buyers, business owners/sellers, business brokers, and agents with SBA loan financing for business purchases (or businesses with real estate), partner buy-outs, and refinancings. For over 10 years he has represented 20+ local and National SBA lenders and financial institutions. He offers SBA loan assistance and placement with SBA loan amounts between $200,000 and $5,000,000. If you would like to submit an SBA loan package or get pre-approved for SBA financing, either on the buy or sell side, phone Peter Siegel direct at 866-270-6278 (for a faster response, when leaving a voicemail please leave a detailed message).
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Brad Steinberg, Broker - Laundromat Specialists
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
|Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers
I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.
|Elizabeth McGovern: Escrow Services - SF Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
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