IV. Third Party Financing of Your Business
If you cannot produce tax returns then skip to the next chapter. But if you can it is imperative that you get the last full year ASAP. As we already established it is what a buyer wants but, more so, they are vital to get lender financing. Contrary to what many think, there is small lending going on. For that matter there is more than ever before. So a properly valued quality business (see below) should be able to generate proven financials to finance a qualified business buyer.
But there are limitations to financing. Those limitations deal with a QUALITY business. Now after reading this don't take offense if your business is not a quality business. It doesn't mean your business is a failure - it just means it does not have enough value for financing. Simply put a quality business has three things going for it. FIRST it has been in business at least 3 years then SECOND it has an annual cash flow / profit of $100,000 or more. And LAST that they have tax returns to back it up.
A limited business has some profit just not enough to get lender financing. The best options for a business like this are either seller financing or doing a lease to purchase option on the business.
You have to be realistic based on your situation and beware of the false profit telling you otherwise.
NEXT CHAPTER - Qualified Buyers
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