If you are looking at a possible business purchase, you should consider the following:
The banks will consider you for a loan with the following factors being most important:
1. Your Credit History (They will order a credit report when you officially apply for a loan).
2. Your Ability to Collateralize the Loan. (The business being purchased does not count as collateral). They want your real estate that you live in, they will factor the current market value by about 75% and then subtract the unpaid mortgage balance. Other collateral would be stocks, bonds, money markets, mutual funds, life insurance cash value, and IRA’s. SBA backed loans will require R.E. collateral if you have it, otherwise not a requirement.
3. Your Ability to Manage and Run the Business. A business plan will need to be written and your business background will be considered.
4. Your Ability to Pay the Loan. A spreadsheet of projected sales and expenses by month for the first year will need to be constructed using records of past financial performance of the business being purchased.
5. The Bank Will Want your full personal financial information completed on their form and will want your personal tax returns for the past 2 - 3 years.
BEFORE YOU GO TO THE BANK, YOU NEED TO HAVE THE EXPECTED PURCHASE DETAILS IN HAND: PRICE -- TERMS -- CONDITIONS.
Thomas D. Atkins (412) 833-1910 or E-mail BATomAtkins@aol.com