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Starting a business can take months -- and can be expensive. Also, it's tough to anticipate some of the problems you'll run into. That's why buying a business can be a good alternative.
So where do you get financing? One approach is to get a Small Business Administration loan.
Basically, this is like any other business loan. However, the main difference is that the loan is guaranteed up to 85% from the SBA, which is a federal program. Because of this, there are usually advantages versus conventional loans, such as:
- Longer terms (10 years for the business, and 25 years if there is real estate involved).
- Lower interest rates (prime rate plus 2.25% to 2.75%)
- Lower down payments (20% to 30% or so). In fact, the down payment also includes seller financing.
OK, what does it take to get such a loan? Let's take a look.
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