I’m meddlesome in purchasing the preference store for sale which has been in commercial operation for most years. I would substantially need the loan for about $200K. I have about 20% money to put down.
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There are SBA(.gov) loan programs in that range, but there are requirements in addition to the profitability of the business (must be verified however, with schedule C’s preferably). I think you need a net worth of a certain amount as well as collateral to cover all or 90%+ of the loan value. You can read more at the SBA’s website. There is a non profit called SCORE that is made up of retired business execs that can help you with a business plan and your loan apps, too.
Of course, if you meet the collateral requirement, a home equity line is another option.
Remember that the principal of the loan is not subtracted from your net income, so you can write off the interest and take depreciation on most of the assets (tangible and intangible are depreciated at different rates) but the principal of the loan comes out of your paycheck after taxes. This is one reason it is very difficult to make acquisitions with business loans unless there is massive growth potential.
Example: $200k business with $40k down. $100k net income after depreciation and interest. $70k income after taxes (high estimate). 5 year loan payment @ 9.5% on $160k is $40,323/year. You’re left with $29,676/year for five years. Not much room for error or a down market or a new competitor moving in across the street.
You may be better off looking for something in the $40,000-$60,000 price range than taking out such a risky loan. You also MUST talk to an accountant about depreciation rates on the business’ assets, as this is one of the only ways to make an acquisition profitable post-tax.