Qualifying for a small business acquisition loan can be quite an ordeal to say the least.
If the business being sold is very profitable, the selling price will likely reflect a significant amount of goodwill which can be very difficult to finance.
If the business being sold is not making money, lenders can be difficult to find even if the underlying assets being acquired are worth substantially more than the purchase price.
Business acquisition loans, also known as change of control funding, vary greatly from case to case.
To that end, here are the most common obstacles you'll face while trying to get a small business acquisition loan.
>>> Investing in Goodwill
The sale price minus the resale or liquidation value of business properties after any debts owed on the assets are paid off is the concept of goodwill. It is a representation of potential earnings. the bu hisiness is expected to generate beyond the current value of the assets.
Most lenders have no interest in financing goodwill.
This effectively increases the amount of the down payment...