The one I'm interested in is debt free and has a positive cash flow. If the company you want to purchase has assets in the form of accounts receivables, purchase orders and contracts, you may be able to borrow against them. To use these assets, however, you may need a bridge loan. In other cases, the bank loans the money to the seller who turns the asset over to the buyer at the time of purchase with the encumbrance of the debt. This means that the debt-free company you want to purchase is no longer debt free.
Many entrepreneurs also obtain personal bank loans.
They can include home equity loans, second mortgages or mortgage refinancing. Business angels are wealthy individuals who invest their own money in other people's businesses in exchange for an equity stake. Customer-financed loans are another option. If this business has customers or suppliers who rely on its products or services and who have a vested interest in its survival, they may be interested in financing a part of the purchase. To determine who these customers and suppliers are, you need to talk with the current owner.