When buying a home based business that will not include commercial property, borrowers should recognize that business loan options will be significantly different in comparison with a business purchase which can be acquired with a commercial property loan. This problematic situation occurs due to the normal absence of commercial property as collateral for the business financing when buying a home based business. In terms of arranging the business loan, efforts to buy a business opportunity are almost always described by commercial borrowers as excessively confusing and difficult.
The comments and suggestions in this report reflect business financing conditions which are frequently provided by substantial lenders willing to give a business loan to buy a business opportunity throughout most of the United States. There are apt to be circumstances when a seller will privately fund the acquisition of a small business opportunity, and it is not our intent to handle those business loan possibilities in this report.
Buying a Business Opportunity – Length of Business Financing to Anticipate
Business financing conditions to buy a business opportunity will most likely involve a lower amortization period in comparison to commercial mortgage financing. A maximum term of a decade is typical, and the business loan is likely to require a commercial lease equal to along the loan.
BUSINESS OPPORTUNITY BUSINESS LOAN STRATEGIES:
Expected Interest Rate Costs for Buying a Business Opportunity
The likely range to buy a small business opportunity is 11 to 12 percent in the present commercial loan interest rate circumstances. This is usually a reasonable level for business opportunity borrowing since it is not unusual for a commercial property loan to be in the 10-11 percent area. Due to the insufficient commercial property for lender collateral in a small business opportunity transaction, the cost of a business loan to acquire a business is routinely greater than the cost of a commercial property loan.
HOME BASED BUSINESS BUSINESS LOAN STRATEGIES:
Down Payment Expectations to get a Business Opportunity
A typical deposit for business financing to buy a business opportunity is 20 to 25 % depending on the kind of business and other relevant issues. Some financing from the seller will be considered helpful by way of a commercial lender, and seller financing may also decrease the business opportunity deposit requirement.
HOME BASED BUSINESS BUSINESS LOAN STRATEGIES:
Refinancing Alternatives After Buying a Business Opportunity
A critical commercial loan term to anticipate when acquiring a business opportunity is that refinancing home based business financing will routinely be more problematic than the acquisition business loan. There are presently several business financing programs being developed that are more likely to improve future business refinancing alternatives. It is of critical importance to arrange the best terms when purchasing the business and not trust business opportunity refinancing possibilities until these new commercial financing options are finalized.
HOME BASED BUSINESS BUSINESS LOAN STRATEGIES:
Buying a HOME BASED BUSINESS – Lenders to Avoid
The selection of a commercial lender might be the main phase of the business enterprise financing process for investing in a business. An equally important task is avoiding lenders that are unable to finalize a commercial loan for investing in a business.
Through the elimination of such problem lenders, business borrowers may also be in a better position in order to avoid many other business loan problems typically experienced when investing in a business. The proactive approach to avoid problem lenders can have dual benefits since it will contribute to both long-term financial condition of the business enterprise being acquired and the ultimate success of the commercial loan process.