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Archive for 'Financing the Business Sale' Category

SBA Lender “Bait and Switch” : A Nasty Practice

By Hoke - Last updated: Tuesday, October 27, 2015

The SBA guarantees 75% of a Business Acquisition Loan. If the Buyer can make a 25% Cash Down Payment, in the event of a default, the Lender can collect the entire loan balance from SBA. It has no risk of cash loss. As written, the SBA program is wonderful and very helpful. However, Lenders have […]

What Are Typical Seller Financing Terms?

By Hoke - Last updated: Tuesday, August 3, 2010

Seller Financing can be custom-fit to any situation. However, if one were to generalize or express an average it would be about a 5 year term with 6% to 9% APR.

Restaurant Acquisition Loans For Buyers With No Restaurant Experience

By Hoke - Last updated: Tuesday, August 3, 2010

Most Commercial Banks will not provide SBA Business Acquisition Loans for restaurants. Some will lend only if the buyer has years of restaurant experience, usually as a restaurant owner. Although it seems to be, “No restaurant lending” is not an SBA policy but is a decision made by the individual lenders. After dozens of phone […]

The Leveraged Acquisition

By Hoke - Last updated: Tuesday, August 3, 2010

[box type="download"] Here is a great example of a leveraged acquisition. This one has a $1 Million Acquisition cost. The Buyer put about 20% down. The balance of the funding came from an SBA Business Acquisition Loan and Seller Financing of about 15%. The Seller received about 85% of the Sale Proceeds in Cash. The […]

What Is An Earn Out? How Is It Used?

By Hoke - Last updated: Sunday, August 1, 2010

An Earn Out is a Note or Contract with variable payments. The payments are usually a Percent of Revenues over a fixed period for usually a fixed maximum. It can be used to provide the Business Seller with a higher potential Purchase Price if the business performs well, or conversely reducing the potential Purchase Price […]

How important are Tax Returns as a means of proving Discretionary Income?

By Hoke - Last updated: Sunday, August 1, 2010

Tax Returns are just one of several means to validate Income. Some Buyers think that Tax Returns are absolute. However, they are not foolproof. There are cases where the Business Seller overstated the Tax Returns. Commercial Banks typically require the recent three years of Seller’s Tax Returns when making a Business Acquisition Loan.

What Is An Earn Out? How Is It used?

By Hoke - Last updated: Friday, July 23, 2010

An Earn Out is a Note or Contract with variable payments. The payments are usually a Percent of Revenues over a fixed period for usually a fixed maximum. It can be used to provide the Business Seller with a higher potential Purchase Price if the business performs well, or conversely reducing the potential Purchase Price […]