Do you know if you can borrow the finance to buy a business?
You have been looking for 6 to 12 months now and you have found the business you want to take the next step and make an offer on. However, before you can make an offer you need to ensure you can borrow the funds to acquire the business. This is when time cannot move quick enough for you, as in your mind you are ready to make the offer, but without finance you are no closer than when you first started looking to buy a business.
It is important business buyers are aware that when an offer is made on a business it is never subject to finance. The main reason for this is obtaining business finance is much more difficult than residential finance and can take some time to be approved. As a business broker, I have seen some buyers take up to 2 months to obtain business finance. They never got to make an offer on the business as it was sold before they could even get finance approved.
So why does it take so long for business finance? Part of the reason, in simple terms, is a two step process. Step 1 is looking at you as a business buyer and understanding what you own, your current debt situation, your commitments going forward and income streams. Step 2 is looking at the business you are going to buy.
If you are serious about buying a business and while you are looking, why not begin at Step 1? Items like residential valuations, applications completed, meeting with your bank, obtaining and supplying supporting documentation all take some time to be prepared and reviewed.
Obtaining the finance can be a stressful part to the process of buying a business so if you want to make it easier on you and your bank, start the conversation now rather than when the opportunity appears.