Seller Financing
Seller Financing, often referred to as “Take-Back”
or “Carry-Back”, is the largest
single source of financing available for the
purchase of a business. Seller financing invariably
offers more convenience and the most favorable
loan terms. In addition, Seller financing frequently
involves below market interest rates, a longer
repayment period, no audits by lender, no loan
processing fees, more flexibility then is available
from a financial institution and tax benefits,
by reducing the amount of Seller’s capital
gains tax owed by the seller.
It is estimated that 90% of small businesses
involve Seller financing. Seller financing is
generally available when the Buyer is able to
offer a down payment of 20 to 50% of the purchase
price.
What Is A SBA
Loan?
The United States Small
Business Administration (SBA) was created
in the 1950's. The SBA offers programs for financing
business acquisitions. SBA terms are always
lower than non SBA loans offered by banks. Approximately
75% of all SBA loans are made pursuant to the
7(a)SBA loan program which features repayment
periods of up to 25 years, full amortization
(no balloon payment) and high loan to down payment
ratios. SBA loans are issued by banks and other
lenders who receive an 80% loan guarantee from
the SBA, thereby substantially reducing the
lender’s loan risk.
For detailed SBA financing information, please
go to SBA website at: http://sba.gov/,
click on the map for the appropriate State and
then click on the City nearest to you.
Commercial Bank
Financing
Major banks and commercial banks may loan money
for business acquisitions either through SBA
guaranteed loans or directly, with their own
funds. When the banks risk their own funds without
any government guarantee, the banks will require
that the borrower personally guarantee the loan
by pledging his or her assets, unless the assets
of the business will independently support the
loan without a personal guarantee.
For More Information Call:
Cheryl Yamamoto, Broker/President
468 N. Camden Drive
Second Floor
Beverly Hills, CA 90210
Beverly Hills Office: (323) 951-9999
Beverly Hills Fax: (323) 951-9910
3600 Wilshire Boulevard
Suite 1903
Los Angeles, CA 90010
Los Angeles Office: (213)
251-9922
Los Angeles Fax: (323) 431-0160
E-mail: cheryl@y2bizbrokers.com
E-mail inquiries will receive a response within
one business day. Please provide business or
home telephone number.
