I would like to buy a large business that cash flows but I need a lot of money to buy it, where do I start? I could leverage my house?

  • sa-tine@alien.topBEnglish
    1·
    10 months ago

    Depends on the industry, but expect the lender to look for a debt service coverage ratio of 1.5 - 1.75 to secure a $5M SBA 7a. This means that the cashflow (including OP’s salary) needs to be 1.5-1.7x the annual debt service amount. If your ratio is less than 1.5, you’ll have a hard time securing a multi-million dollar 7a loan. Debt-service ratio is the most important metric in securing bank financing, FYI. Also, 15% down may be a more realistic expectation than 10% unless OP has a strong narrative. I’m in the same boat as OP trying to do the same thing now. DM me any specific questions.

    • berkeleybikedude@alien.topBEnglish
      1·
      10 months ago

      This is interesting, I found this out recently but more as it related to purchasing a commercial property. If the property is leased or will be leased, the income from the tenants should be at least 1.5x what the mortgage is (or whatever it’s called in that scenario)