Different Ways to Secure Financing
When it comes to an acquisition, there are always crucial things that you need to consider. Many acquisitions fail because priorities are not straightened. There is more to an acquisition than the purchase price. You need to concern yourself with the potential for growth and whether the business actually complements your company. Once this is settled, you can acquire the company. If you are having problems raising funds or capital, you can secure capital via other means. Here are 5 ways to secure financing to acquire a small business.
1. Bank Finaning
When it comes to looking for funds to acquire a business most business owners would turn to the banks. Loans are based on credit histories, the type of business that you do, asset volume and the number of years you have been in business. You use assets to secure a loan. What this means is that if you fail to meet up with payment, your asset is then sold to cover up the loan cost.
2. SBA Loans
These are loans supported by the Small Business Administration (SBA). Ironically, SBA does not offer loans. However, they stand as a guarantor that the recipient of the loan will surely pay the lender. SBA loans are meant to help small businesses get the necessary capital irrespective of their credit status or the quality of their assets.
3. Start-Up Loans
These special loans are offered to fresh businesses that require capital to start-up or expand. These monies are used for equipment, inventory, overhead costs, staff salaries and rent. Start up loans come in handy because they can be obtained without any credit history or assets.
Short term loans have low-interest rates because of their quick repayment term. Long term loans are used to offset bigger budgets. They are paid back over a long period of time and attract high interest rates.
4. Check Credit
Revolving check credit is a facility that is offered only by banking institutions. The recipient is provided funds to use as credit and writes a special undertaking about repaying the loan in 3 installments. Charges are usually incurred based on credit used every month. Lenders have ample time to pay back this loan. The interest fees are relatively low.
5. Merchant Cash Advance
Businesses that rake in at least $5,000 in monthly credit card sales can afford to get a loan of $250,000 or more with a merchant cash advance. Payment is made from credit card sales until the amount is paid in full. You do not need collateral or credit checks. Another good thing is that there is no discrimination, all businesses can leverage on this opportunity.
About The Author
Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps business owners learn how to sell a business so they can get the maximum value for their company. call us 416 364 5550 or CONTACT US to get in touch.
Date modified: 7-24-2019