Possible to get a loan to buy an existing profitable business?

by Hitmaker00. Posted on Sep 11, 2020    0    5

Looking at a restaurant. I practically run it for the owner. I do literally everything but his taxes. He pays me $60k salary to manage, order, negotiate contracts, and I even have access to the account to pay the bills.

The owner has recently gotten into some money trouble (got sued), and wants to sell. He’s willing to give me a slight discount since I’ve been there so long. The place makes about $220k profit per year. He’s selling for 700k but would sell to me for $500k. I already have some ideas to increase revenue, but I haven’t had the chance to bring them up to him. With that said, I have $30k in cash and around $20k in stocks. I’d also be saving myself that $60k that he pays me considering I’d be working the same amount, probably even more so that would be added to the profit part. Would this be enough to get me approved for a loan? If not, what would be the best route to get the money? Private investors?

Edit: would also like to mention my father is willing to gift me $20k to make it 10% down


Shortysvtdad 1

With 10% down, you would qualify for an SBA guaranteed bank loan. You'll have to go to several lenders to find the 1 that will do the loan based on cash flow and not assets. You need 3 yrs of tax returns for the business and you, a current Income statement and balance sheet and reasonable projected income statements for the next 3 years. Good luck

captain-doom 1

Typically for a bank to loan they’ll need 3-5 years of the company’s taxes. Not a ton of assets or accounts receivables in a restaurant so if you’re not working with a bank and banker who has been working with the place for years you’ll most likely need to personally guarantee the loan and probably won’t get the full 500k.

Worth a shot.
Other options. Instead of 500k today, have him finance the loan and you give him 600 over 5 years or some period of time.

Or if you can get part from the bank to the owner as a downpayment and pay him off over time.

Anyway it goes down.
You’ll need business taxes, access to his current CPA and your own attorney to draft up any agreements so you are properly protected

tempecreekvineyard 1

Business plan and currenr financials of the business.

mostadont 1

Wow have an opportunity to buy a business for only 3.5 years of profit? Thats an insanely lucrative deal. If the numbers are clear, you will get a credit in any bank. IMHO its wiser here to get the credit because you will pay it off in a couple of years and after that the business is yours. While it might not be the same with private investors and their usual interest in management.

  Hitmaker00 1

Any idea what they usually require up front to be approved for the loan? I have great credit, but unfortunately no assets. Would I need my boss to get paperwork to prove the income? I could be high a bit but it’s a very profitable restaurant