For Example:
 

Let's say you want to earn about $40,000 per year from a business. You have found an opportunity that produces a cash flow of $55,000. It is priced at $140,000 with a $45,000 down payment and note payment of $1250 per month for 10 years, including 10% interest. Can you afford to buy it?
 

Down Payment                                                                     $45,000
 

Note to Seller (paid at $1250/mo.)                                          $95,000
 

Total Price                                                                           $140,000
 

Total Cash Flow                                                                   $55,000
 

The annual debt service is                                                      $15,000
 

The remaining $40,000 is available                                          $40,000
to the new owner.
 

Usually, the business purchases work best if the debt payments are kept to about 30% or less. In this case it is... 27%

Therefore, you could afford to pay $140,000 for this business and it would make the debt payments and return your desired personal income.
 

FAQ

Can I Buy A business For Zero down?

The sort answer is no, the long answer is also no. Unlike Buying a house, where a bank can easily take the home back and resell it. Banks loan very little on Business equity this is becouse ALL BUSINESS VENTURES ARE HIGH RISK and need someone to run the business, banks don't like risk and donot have the time to run a business. when a business defaults on a loan the assets are auctoned off or sold to recover the money often at a loss to the bank. According to the Small Business Adminastration's (SBA) Guide line for lending on businesses the Maximum 7(a) Loan is 75 percent of Total business price. with a maximum of $2 million on the loan. so even if you can get a loan approved you still need to have 25% to put down, plus working capital.

Do all Businesses Qualifiy for a Bank Loan?

Again the Answer is no. The best way to find out if a business type you looking at will qualify is talk to your banks' Small business Loan officers. also look at the SBA's guide lines on their website here________

Do I qualify for a SBA or other Bank Loan?

The answer may Vary from one Bank to another. As We Are Not a Lending Institution, we can not answer if you qualify for a bank or SBA loan. The best way to find out if you will qualify; is to talk to your banks' Small business Loan officers.

I don't Qualify for a SBA or other Bank Loan to buy a business, will I qualify for Seller Financing?

The answer may be Yes. If you have the Money for a down payment, and can Provide collateral such as equity in a home; You may qualify with a seller to be financed. the First Step in Qualifying to buy a business is filling out a personal Finacal statment which you can find in the Buyers' Packet

I have money but I would Rather use Most of that monay for other things can I still get a SBA or other Bank Loan without useing all my money?

The answer for and SBA Loan is a resounding NO. as stated on the SBA website: AVAILABILITY OF FUNDS FROM OTHER SOURCES. The Federal Government does not extend credit to businesses where the financial strength of the individual owners or the company itself is sufficient to provide all or part of the financing. Therefore, the utilization of both the business and personal financial resources is reviewed as part of the eligibility criteria. If business and personal resources are found to be excessive, the business will be required to be use those resources in lieu of part or all of the requested loan proceeds.

The Answer for a conventonal Bank Loan may be yes. The best way to find out if you will qualify; is to talk to your banks' Small business Loan officers.