The process of buying a small business can be exciting, but it can also be stressful. If you’ve never been in this position before, it’s easy to get overwhelmed by the amount of work that goes into buying a new business. You have to consider all kinds of factors: finance, legal issues and more. However, when it comes down to getting financing for your purchase, there are some steps that you can take to make this process easier. By following these simple steps below, you will be able to find the right financing option for your business
Get Pre-Qualified
Before you even start looking for a business to buy, it’s important that you get pre-qualified. The process of getting pre-qualified will help you determine your overall financial situation and determine how much money you can spend on a small business, says Vincent Camarda. This is also known as “getting pre-approved,” but the terms are used interchangeably.
The first step in this process is having a lender run a credit report and score on your behalf–this way they can see how much debt (and what kind) you have been carrying around with them over time, so they can better understand whether or not they should approve your loan request when the time comes. If all goes well during this phase of things, then congratulations: You’re ready for step two!
Prepare Your Business Plan
You can’t get a small business loan without a business plan. It’s as simple as that. If you don’t have a formal, written document that outlines your company’s goals, strategies and metrics–and explains how they will lead to success–you won’t be able to convince lenders to give you money.
The good news is that creating a solid plan doesn’t have to be difficult or take weeks of work; in fact, many small business owners find it easier than they expected once they get started on their projects! Here are some tips for writing an effective plan:
- Make sure every section has a clear purpose: Each section should contribute something important toward achieving the overall goal of the project at hand (e.g., raising capital).
Get Your Credit In Order
Now that you’ve determined what type of financing you need, it’s time to get your credit in order, says Vincent Camarda. A good credit score, history and report are crucial for getting approved for a loan.
A “credit report” is an electronic record of information about your financial accounts and repayment history that creditors use in deciding whether or not to extend credit to you. A “credit score” is a number between 300 and 850 calculated by using information from one or more of these three main sources:
- The information in your credit report(s)
- Information from other companies that have obtained your permission (such as insurance companies)
- New data about how well others think they know you
Choose The Right Lender For You
When it comes time to choose the right lender for your business, there are a few things you should look for. First, be sure that they’re willing to work with you. You want a lender who will help you grow your business and make it as successful as possible. Second, look at their rates and terms of financing–are they competitive? Third, do some research into the reputation of this particular lender before deciding if they’re right for you!
