You may have a dream of making your future brighter as one of the successful entrepreneurs. Some of us set up a new business, while others think of acquiring it from another entrepreneur. Thus, for buying a stronger and more profitable business, you may apply for an SBA loan. With this loan, you may need 10% down payment. This minimal down payment enables you to increase your ROI from your business. Now, the question is- How would you buy your business by using SBA loan.
To apply for an SBA loan to acquire a new business, you must ensure three things
- The business must generate a high revenue to repay your SBA loan.
- Your qualifications and financial status- The lender need to make that as one of the potential business owner, you will be able to pay off the loan.
- A deal on full acquisition of the business without any partial equity.
Valuation of your business
Your SBA loan providers work with a valuation agency to find the value of your chosen business. As one of the buyers, you have to put down 10%, while the SBA will offer 75% of the essential amount. Now, for the remaining 15%, the seller will finance on his own.
The lender can ask you questions on different things-
To offer you the loan, your lender has to focus on few issues-
- The debt-to-income ratio and your financial condition are two major factors for acquiring a business.
- Your present earnings
- The credit ratings- Your score has to be minimum 640.
- Any debt- Although you may be eligible for the loan, your lender will still reject your loan due to your present debt.
- Real estate and other assets– Although SBA loan may be available to you without real estate as a collateral, you must have this asset.
Know about the type of your business and make your budget
It is one of the important steps for buying a business with SBA loan. You need to identify the relevant industry, business location and work hours. Then, you can calculate how much money is available to you for down payment. You may have instant cash, retirement scheme, other investors and financial gifts.
Documents you need for faster loan application
Most of the SBA loans take longer processing time. You have to make your documents ready to accomplish the loan process.
- 3 Years Tax Returns– For validating financial records
- Loan Application Form with the right details
- 4506-T Form– For checking the accuracy of your details
- Borrower Information Form to track the amount borrowed by you
- A detailed resume that reveals your qualifications to manage the business.
- Balance Sheets– While you presently own any business for funding a part of the business acquisition, you need balance sheets. You must also submit the statements on profit and loss.
Now, you can arrange the essential documents and buy your business with SBA loan. Find the most reliable lender to use the loan and acquire a new business.
If looking to Apply For SBA Loan Click HERE