A consulting client of mine who is selling an upscale dog kennel came to me to pre-qualify her business ahead of time for
SBA loan financing for potential buyers. A good move since most sellers of small businesses don't give financing a second thought when they go to market. Most business buyers waste too much time going to the wrong lender when they try to obtain financing to buy a business.
When owner/sellers take control and get their business "positioned" for financing & the selling process is much smoother and faster for all parties concerned.
I informed her exactly what types of business buyers would qualify and what to look for in a potential buyer. Well she got so excited about potential buyers she didn't listen to all of my advise! I just received a call from her "top choice buyer" this week and I think my client was "sold" by this perspective buyer.
This potential buyer has a computer consulting work background who used to "walk dogs" four years ago and feels that this experience would "qualify him" in running a very successful dog kennel operation. I informed him that lenders on that size loan would probably disagree with him especially since he doesn't own any real estate (home equity) and his credit is only so-so.
Work experience/skills is critical for getting financing to buy a business & and most buyers don't realize this fact or want to face it.
Buyers should qualify for business purchase financing before they buy a business, and they should get qualified from someone or a lender who is going to tell them the honest truth about how they stack up both financially, and professionally for financing a business purchase!
I phoned my client back and let her know that she needs a buyer with self employment experience, or has been involved in the pet care industry & possible someone who has managed a grooming shop, or who has worked extensively with dogs (i.e. training etc).
In fact a business buyer who I have consulted on financing in the past just fell out of a deal on a kennel (the owner was asking way too much money for the business) & this buyer has trained and cared for dogs (for the handicapped and blind) for over 5 years and has the down payment and credit score to qualify for a loan & now this is a good fit for financing!•
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