The owner of the business (small hotel) I’ve worked for for the past few years is looking to sell. I’m interested.
How hard would it be to get a loan for 270k to put a down payment towards a ‘lease-to-own’ business? I have 30k to put down on the loan. Is a loan like this impossible, do I need investors?
In total for he business, she wants around 5 million (+ interest), with 300k down and 10 year lease-to-own to pay back the remaining balance.
The business has been around 20+ years and is successful. Last year the net income was just shy of 1 $1million (very good year), but on average is 700k/year.
I’ve owned/operated a VERY VERY small LLC for 2 years, and currently work for the company I want to buy and have worked most of the roles there, but not a manager role. I would be owning/managing it if purchased. I have excellent credit (800+) and have about 30k in government student loans which I am in good standing. I have a Masters degree in STEM, but nothing in a business related field.
I’m currently paid under the table and report a lower income then I actually make.
Would any lender (maybe through SBA 7a?) lend me money to put a down payment on the business? If not, what variables can I change to make it more likely. If I can put more than 30k is it more likely?
Thanks in advance.
$4.7 million at 13.5 percent interest (prime + 5.0%) over ten years is monthly mortgage payment of just over $71,500 or $858,000 annually.
$1.0 million net less debt $858K = $142,000
What happens when net is $700K (average).
She takes business back and you lose $300K.
Generally speaking, a bank might require about $1.0 million down plus collateral.
Flag or nonflag (i.e. major franchise vs independent)?
If seller will carry, you could probably get creative and get this done.
A client - FremontFunding.com - does these sort of things, creative SBA loans - a buddy recently bought a trailer park for essentially almost nothing out of pocket by adding a promissory note for some of the trailers into the mix.
Loans like this are more based on the business income than yours; need 2+years minimum in business.
Also hotels are notorious for 3 sets of books: the tax-books (low), the buyer books (high) and the real books. You need to count cars at 3am a few random days.
hmmm I know a business financing advisor in lending you could talk to and see if there is a way for you to do this with a SBA or whatever works.
I think his lending company has previously approved a 10% down term loan to buy an existing business.
Let me know.
Either way, best of luck
Excellent credit doesn’t mean much when you have low income. And you also have a student loan on hand. I don’t think its possible to get a 270k loan.
Looking for outside investors likely would not work either. Your story sounds really shady like being paid under the table. How do you want to explain this part to anyone? Is the business even legitimate?