Alternative Financing Sources
 |
 |
Question:
I have owned and operated a Domino's franchise for five and a half years and now I have found an under-priced pizza restaurant in Hawaii. The problem is due to certain events I obtained a lot of bad marks on my credit report, which was great five years ago or I would not have gotten a loan then. I have never been late on an SBA payment or to the bank. How can I get the needed $50,000 start-up capital? The owner has agreed to finance another $20,000.
Answer:
You have a number of options available to you, but first I want to understand if you have any available capital at all? You have to approach this deal with the realization that you do not have a lot of leverage financially. The only factor in your favor is that the business is being sold at a discounted price. Therefore, you must prepare a proper presentation to potential lenders that outlines this facet very clearly.
For purposes of this answer, I shall assume not. The most logical place for you to go first is the bank that financed your Domino's business. They are the ones with a history on you. Second, should that fail, is to approach anyone or institution with whom you've had a successful financial relationship. Next, any possible personal friends/family members who youcould bring on as a silent partner?
Should you exhaust all of these avenues without any luck, then the seller in Hawaii is your only resource. Since this business is under-priced to begin with you should approach him/her with two deal scenarios:
- To buy part of the business now with an agreed upon buyout over the next 2-3 years at a pre-determined formula thus lowering the amount you need upfront.
- Pay them more than their asking price but have them hold a larger note. If the business is priced below what you believe it should be, then you should have no problem paying them more if they're willing to finance more.
Download expert tips, and proven strategies covering the entire buying process. Learn how find and buy the right business and negotiate a great price. Click here.
Download a 200-Point Due Diligence Checklist & Strategy Guide. Learn everything about any business before you buy. Click here
| Get more expert advice in Richard Parker's How To Buy A Good Business At A
Great Price - the most widely used reference
resource and strategy guide for buying a business. "I highly recommend this course to anyone even thinking about buying a business." - Dylan Garland President, BizQuest |
|
|
|
Richard Parker author of: How To Buy A Good Business At A Great Price(TM), the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center. Richard Parker is also the author of BizQuest's Business for Sale Blog |