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Home | Business | Small Business The guidelines and comments in this article are based upon business loan terms that are typically available from respected lenders willing to provide business financing for buying a business opportunity throughout the United States. There will always be occasional situations in which the seller is willing to privately finance the purchase of a business opportunity, and it is not practical to discuss those business financing possibilities in this article. Buying a Business Opportunity - Length of Business Financing to Anticipate When purchasing a business opportunity, commercial loan terms will almost always include a reduced amortization period in comparison to a commercial real estate loan. A business loan term of ten years is normal, and that length of loan is likely to be tied to a requirement that the commercial lease will not expire before the loan matures. Likely Interest Rates to Buy a Business Opportunity The likely range to buy a business opportunity is 11 to 12 percent in the present commercial loan interest rate circumstances. This is a reasonable level for business opportunity borrowing since it is not unusual for a commercial real estate loan to be in the 10-11 percent area. Because of the lack of commercial property for lender collateral in a small business opportunity transaction, the cost of a business loan to acquire a business is routinely higher than the cost of a commercial property loan. Down Payment Expectations to Buy a Business Opportunity Depending on the specific type of business and some other issues, a normal down payment for a business loan to buy a business is 20 to 25 percent. Some seller financing (such as 10 percent) is usually helpful and in some cases might reduce the down payment required from the buyer to buy a business. Buying a Business Opportunity - Refinancing Options An important business financing factor to include in planning efforts when purchasing business opportunities is that refinancing the business opportunity financing conditions will typically be harder to deal with than the initial commercial loan. There are several new working capital loan programs under development that could significantly change future choices for business opportunity refinancing. Until these new business opportunity financing alternatives are available, it is advisable to obtain the best financing terms when the business is initially acquired and not rely upon future refinancing choices. Buying a Business Opportunity - Lenders to Avoid Most commercial borrowers are likely to consider the most important part of the commercial loan process for buying a business to be the choice of a business lender. Not to be overlooked is the importance of avoiding lenders that are not generally successful in finalizing business opportunity financing. By avoiding such lenders, commercial borrowers are likely to avoid many other business financing problems frequently associated with buying a business opportunity. Avoiding problem lenders will be instrumental to the eventual success of both the business loan process and the long-term financial health of the business being acquired. Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved. Article Source: http://www.articlewheel.com
Stephen Bush provides candid church financing - commercial financing advice. Free series of AEX Credit Card Factoring - Credit Card Processing reports
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