Alternate Funding Source for Buying A Business

Finding alternate ways of funding a business

Whenever you are short of cash you can try these alternative methods for finding the required funding and financing and for purchasing an existing business.

Use your future assets

After you have bought the business you are going to own the assets of the business. So you can use this fact to get a loan from banks, finance Company and factors. You can make a list of all the assets that you are going to be buying along with any attached liabilities and present it to these financial and lending institutions to get the required load.

Using purchase order orders

Finance companies, banks and lending institutions will also be ready to give you a loan based on your receivables as well as on an existing inventory. Your existing equipment can be sold and then leased back from equipment leasing companies as well.

Seller financing

In certain circumstances you can ask the seller to provide financing. Many sellers may be agreeable to this kind of an arrangement because it might need a continued income for them. A seller financing should be easier for you to get because sellers are less stringent rules and regulations and to address less critical credit review than a lending institution. Seller financing is also flexible and you can come up with the the kind of arrangement that suits you both the best. You can structure a deal as you want and if they go to negotiate a payback schedule according to what is convenient to both parties. And some sellers will agree to bring down the price of business for continued perks such as a company, etc. Some may take notes of credit and a monthly payment on their financing as well.

Use an employee stock ownership plan

If you are going to raise capital immediately by selling stock in the business to employees, you may be able to get a business for as little as 10% of the purchase price. If you sell only nonvoting shares of stock you can still retain control of the business.

Lease with an option to buy

Some sellers will agree to ease your business and allow you to run it like you owned in the time that you can make a down payment you can completely buy the business. In the meantime you make a down payment and become a minority stockholder.

If you are short of money one way to reduce the cost of business is to either decline taking on the pending receivable accounts or by assuming the existing liabilities of the business.