Yet So Far You re buying a business, but your banker won t loan you the full amount here s what to do. I have about 20 percent in cash. Bridging this gap is a problem that's kept many entrepreneurs from turning their dreams into reality. You are a good risk and are buying a profitable business, but given that you're an unproven entity, the bank is naturally going to be conservative with your loan. The existing owner, of course, wants to make a profit from years of labor and isn't likely to lower the price.
Many business owners approach venture capital groups and angel investors.
Though they're solid options, tapping them requires countless hours of effort on your part to find them, prepare presentations and follow up. Fortunately, there may be another way. The perfect scenario is to persuade the current owner to take back subordinate debt in other words, take back a second note behind the lender. The owner wins with the possible tax advantage of deferring capital gains, and you win with an overnight solution to your problem. Of course, we don't live in a perfect world, and the current owner may have already ordered an RV and made reservations at Gatorland and just wants his or her money.