How to Get a Loan to Buy an Existing Business

How to Get a Loan to Buy an Existing Business
Borrowing money to buy a business can be scary.

Decide how much you are willing to spend each month. Consider the amount of money you will spend on the business loan repayment amount, overhead and Insurance.

Research how much worth the business has in the current market and economy. Also, determine how much you need to borrow. For the sake of this project, we will assume it is less than $250,000, which would be considered a small business loan.

Create a five-year business plan and try to secure at least 20 percent for a down payment. Some lenders offer options that don't require a down payment. But in reality, purchasing a business is comparable to purchasing a new home, which often requires a down payment. The five-year business plan must include a financial statement, a profit and loss statement and a statement of projected income. For an existing business, the numbers that are included in these statements are crucial.

Compare business loan terms, rates and conditions among different financial institutions. Decide on one and make an appointment.

Prepare yourself for your initial interview with the financial institution of your choice by being ready to convince the financial associate of how much you want this. For example, inform them of whether you're willing risk your own money or other assets. Have your business plan ready to present, as well. This will show your commitment to the task. Remember, your business plan requires accurate numbers and a well thought out plan of action.