The fact is, we don’t expect a long lasting opportunity for California small business buyers to benefit from the SBA 7(a) loan program. So today is the best time to start working on submitting a loan application. Being pre-qualified often makes the difference in successfully closing escrow on a business you want to buy.
Dublin, CA (Vocus) September 29, 2010
The Small Business Jobs and Credit Act of 2010, just signed by President Obama, is expected to improve access to funds by people interested in buying a small California business. But entrepreneurs are advised to prepare now for the borrowing opportunity because the window provided by the new law may not remain open long, according to Peter Siegel, MBA, Founder and CEO of http://www.BizBen.com, the state's leading clearinghouse for selling and buying small businesses.
"Buyers who need extra capital to complete a deal, or someone still looking who wants the money ready in order to act quickly when a suitable business is found, should waste no time employing the four steps needed to become SBA loan pre-qualified," said Siegel. "If the recent past is a reliable indicator, lenders will be motivated to make loans while the SBA 7(a) loan program incentives--reactivated by the new law--are in place. Among the most popular incentives is the federal guaranty of up to 90% of loan amounts."
To be an attractive borrowing candidate, and get SBA loan pre-qualified, even before the money is needed, Siegel said that potential business buyers must:
1. Decide, then document what you are able and willing to do financially. How much cash do you have that can go toward a down-payment and for working capital? Is there money available from friends and/or relatives? What assets might be used for collateral? Are you realistic about the value and suitability of assets such as home equity and stock market investments that might help secure a loan?
2. Prepare an up-to-date resume detailing your work experience. The emphasis should be on strengths and professional skills that will be put to use to successfully manage a small business. A background in the fast food business should be stressed when seeking money to buy a company in that industry. And experience managing employees, maintaining financial records and dealing with vendors is important and should be described for prospective lenders.
3. Have a basic business plan. If you have found a company you want to buy and need more money to make the purchase, it’s important to prepare a business plan describing the specific steps that will be taken to successfully operate and to expand the business. Few if any lenders will consider a loan application that is missing a business plan. The plan needs to include a summary of some of the problems that might occur in operating the business along with the strategies for dealing with those issues.
And any buyer who has not yet identified a company that he or she wants to purchase still should learn how to create a business plan in order to be ready to produce it as soon as the need arises.
4. Line up an SBA loan broker and consultant. You’ll need a professional who knows which lender(s) will be willing and able to provide the funds you need. Make sure to select someone who is experienced at putting together loan applications specifically for small business purchases.
A common and fatal error made by would-be purchasers of small California businesses is not getting pre-qualified so the money can be available when needed to complete a deal.
“These ideas and many tools needed to implement them have been assembled into the Buyer’s Success Program recently posted to the http://www.BizBen.com site,” said Siegel.
“And it’s encouraging to see that the volume of visitors targeting that program--interested in becoming pre-qualified--has increased appreciably since mid-September, when the law was approved by the U.S. Senate and sent to the President.
“Small business buyers are learning that time is of the essence not only because sellers are impatient; and not just because other buyers may be ready when you are not.
“The fact is, we don’t expect a long lasting opportunity for California small business buyers to benefit from the SBA 7(a) loan program. So today is the best time to start working on submitting a loan application. Being pre-qualified often makes the difference in successfully closing escrow on a business you want to buy."
BizBen has been an important factor in California’s sale of small and mid-sized businesses since 1994. It is comprised of 1) http://www.BizBen.com a vibrant online clearinghouse offering 7,000+ California businesses for sale (with 200 new listings added daily), plus valuable information and ideas provided through a daily blog, webinars, articles and online radio programs; 2) BizBen Network of 16,000 business buyers, 4,000 business owners/sellers, 1,800 brokers, agents and intermediaries, and 600 advisors/resource providers; and 3) BizBen Index which gathers small business sales data throughout the state and provides vital, up-to-the-minute statistics regarding the sales of small and mid-sized California businesses.