Rarely does a buyer have enough cash to buy a business outright. We represent the sellers of businesses and their willingness to finance at least a portion of the sale has become essential.
Milwaukee, WI (PRWEB) May 03, 2012
At Sunbelt Midwest helping buyers realize their dreams of owning a business is a daily practice. Finding a business for sale that matches a buyers search criteria is considered by some the easy part of business sales. Accessing capital required to purchase a business however can be a laborious task. "Rarely does a buyer have enough cash to buy a business outright." said Ed Krajcir, President of the Milwaukee office of Sunbelt Midwest. A primary source of lending has been commercial and bank loans backed by the Small Business Administration (SBA). Unfortunately, in the past few years banks have granted much fewer loans resulting in creative financing from friends or family, retirement funds and seller financing to complete sales. More and more business deals are being done through creative financing these days but it seems traditional lending sources are getting back in the game.
According to Reuters.com borrowing by small U.S. businesses hit its highest level in nearly four years in November of 2011, pointing to strength in the economy. The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small businesses, surged 10.2 points to 106.4, the highest level since February 2008. The index was up 18 percent from November 2010. FDIC data showed an increase in lending to small businesses with up to $1 Million in revenue in the fourth quarter of 2011.
“It’s great to see banks becoming more active,” said Ed. “Qualified buyers were having a difficult time getting bank loans in recent years even without any history of delinquency or bankruptcy. Many small businesses across the market saw a substantial drop in revenue in 2009. In 2010 and 2011 there were some increases however with this drop banks were unwilling to lend money to small businesses. Now when banks look back at the past 3 years of financial information for most businesses the financials are trending up. Signs of growth and increase of sales is helping the underwriting process and is a contributing factor to more recent lending being granted. In past years, we got creative with financing. Buyers were tapping into their retirement funds to finance businesses they felt had favorable growth opportunity or as a way to diversify outside of the stock market. As a business broker, we represent the sellers of businesses and their willingness to finance at the least a portion of the sale has become essential during these hard times when willing buyers are having a difficult time finding financing.”
Signs pointing to bank lending are everywhere these days. A recent New York Times article reported credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year prior, according to Equifax’s credit trends report released in March of 2012.
Ed said, “Buyers need capital to purchase small businesses in America and throughout our process of selling a business it’s the financing that can make or break a sale more than other factors. We work with private equity groups, peer to peer lenders, lawyers, sellers, SBA loan administrators and it is reassuring once again be working with bankers to close more business transactions.”
About Sunbelt Midwest
Sunbelt Midwest is an elite division of Sunbelt, the largest organization of business brokers and M & A professionals in the world. With five offices in Minneapolis, Minnesota; Chicago, Illinois; and Milwaukee, Wisconsin, Sunbelt Midwest is a premier brokerage. The business brokers and M & A intermediaries of Sunbelt Midwest, consistently rank in the top performers of Sunbelt International. Because of this team’s expertise, it has been trusted with coordinating all of the national franchisor relationships for Sunbelt. Because of this interaction, Sunbelt Midwest has a unique ability to market businesses throughout Sunbelt internationally. Sunbelt truly has GLOBAL reach! http://www.SunbeltMidwest.com