SBA Loan Update: Everyday I am going to try and blog about some of the calls my office gets on the topic of SBA loans for business purchases. Hopefully this educates future business buyers / borrowers realize what works and what doesn't utilizing financing to purchase a business.
Business Purchase Financing Calls - Some Examples From Today:
Caller: "No income listed, $235K in credit card debt"
My Response: $235K in credit card debt? No lender is going to take someone on with this much personal debt! Credit card debt is part of overall personal debt and if there is too much credit card and personal debt and the adjusted net income from the deal doesn't cover the debt service and your personal debt & forget about getting financing to buy a business at this time & pay down the debt and start again!
Caller: "Drafting technician, no self employment, doesn't want a partner, wants to buy Adult Daycare center"
My Response: Work experience plays a big part in the underwriting process for business purchase financing. If you have unrelated work experience or skills that don't relate to the business your are buying, you might as well walk away now. My advise in these cases is to find a partner to go in on the deal, or see if one of the key employees or managers may be a very minority partner to help in buying this business.•
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