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03-11-2011, 01:47 PM
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#1 | Banned By Establishment
Join Date: Mar 2006 Location: Richmond
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| Small Business Loans
I have an opportunity to take over a business that does ~80-130k a year in profit, but I've just taken myself out of debt and paid off something that went to collections.
I need 90k to "buy" the business, but I don't know where to look, or for that matter even if I will get approved for a loan.
How do small business loans work? Do I need my own capital, or will banks fork over the money if the business plan is good.
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03-11-2011, 02:07 PM
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#2 | MiX iT Up!
Join Date: May 2006 Location: vancouver
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bank will grade you on the 5 c's of credit
Character - that is you! what kind of background you have (education/work/biz exp etc..)
Collateral - this is like inventory at your biz ( quicker to turnover the better it is )
Capital - how much of your own funds you got invested? Are you as involved as the bank?
Conditions - this is like debt covenants and stuff ( dont think it applies to small biz - i'm not sure )
Capacity - cashflow of biz. do you have enough cash flow to pay your obligations.
answer those yourself . and present your case to the bank using that info. you will be in their good books.
__________________ Sometimes we tend to be in despair when the person we love leaves us, but the truth is, it's not our loss, but theirs, for they left the only person who couldn't give up on them.
Make the effort and take the risk.. "Do what you feel in your heart to be right- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't." - Eleanor Roosevelt |
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03-11-2011, 02:50 PM
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#3 | Diagonally parked in a parallel universe
Join Date: Aug 2009 Location: Coquitlam
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Have you gotten a full audit of the business done independently?
It's very, very easy for a small business to make themselves look more profitable than they actually are (and I have seen this done many, many times to lure in prospective buyers). The bank will probably want this any how, but I wouldn't put a cent into it until it was done if I were you. Also a credit check and an audit of debts you will inherit with the company.
Selling a business for 90K that does more than that in a single year in profit strikes me as a bit questionable but I imagine it depends hugely on the industry.
Here's some info on the Canadian small business financing program: http://www.ic.gc.ca/eic/site/csbfp-pfpec.nsf/eng/Home
It's more for improvements on business than aquisition of business though.
__________________
~ Just another noob looking for a clue
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03-11-2011, 03:37 PM
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#4 | Banned By Establishment
Join Date: Mar 2006 Location: Richmond
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Its not a sale persay more like a takeover for someone who wanys to keep his intrests in that franchisee while taking a better oppurtunity in the company. The source is trusted too. Posted via RS Mobile |
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03-11-2011, 05:06 PM
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#5 | RS has made me the bitter person i am today!
Join Date: Apr 2002 Location: In your head
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Buying a business for 1x profits means that there's something wrong with the business. NO ONE sells their business for 1x profit unless there's something that's going to happen, or has happened that would materially affect the business.
Knowing you, you're going to ignore my advice and go ahead and try to get the money somehow. Don't say I didn't warn you cause you're gonna get fucked up the ass hard.
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03-12-2011, 01:41 AM
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#6 | Banned By Establishment
Join Date: Mar 2006 Location: Richmond
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The reason isn't sketchy, its actually my bro norm.
Its legit, its just a franchise issue because he's taking a better position within the company on the other side of the country. Posted via RS Mobile |
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03-12-2011, 02:32 PM
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#7 | RS has made me the bitter person i am today!
Join Date: Apr 2002 Location: In your head
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Originally Posted by MajinHurricane The reason isn't sketchy, its actually my bro norm.
Its legit, its just a franchise issue because he's taking a better position within the company on the other side of the country. Posted via RS Mobile | Because your brothers have such a good record of looking out for your best interests right?
Maybe this is the good brother. Maybe he's being nice to you by selling for 1x profit. Maybe he really sucks at business. Maybe this... maybe that.
I can tell you for certain that 1x profit is sketch.
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03-12-2011, 07:58 PM
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#8 | VLS Head Mod
Join Date: Sep 2002 Location: E Van
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Dafonz if you're not going to contribute don't post Posted via RS Mobile |
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03-13-2011, 03:34 AM
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#9 | Banned By Establishment
Join Date: Mar 2006 Location: Richmond
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No he's right with his first comment. Posted via RS Mobile |
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03-13-2011, 09:31 AM
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#10 | VLS Head Mod
Join Date: Sep 2002 Location: E Van
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Sorry I was getting at that last comment Posted via RS Mobile |
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03-13-2011, 12:43 PM
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#11 | RS has made me the bitter person i am today!
Join Date: Apr 2002 Location: In your head
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Originally Posted by saucywoman Dafonz if you're not going to contribute don't post Posted via RS Mobile | I know his history a lot better than you do so actually yah I am contributing and my advice is sound. Piss off.
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