I'm purchasing an existing convenience store. How do I finance this purchase? I need about $50,000.

I'm currently employed. Combined income for my wife and me is about $200,000 per year. Combined, our 401K accounts total approximately $250,000. The convenience store is housed in a Miami residential building of approximately 300 apartments, 90 percent of them occupied. I recently formed a corporation to purchase this business.
If the business you're buying is making money, you may be able to obtain a bank loan to finance the deal. However, if the seller is willing to provide financing, this may be an even better option. Seller-side financing (often referred to as an "earn-out") allows the buyer to make a small downpayment--say, 10 percent of the purchase price--then pay out the rest over time.

Often, earn-outs are tied to the company's future financial performance, giving the former owner an incentive to teach you the business and retain loyal customers.

For reprints and licensing questions, click here.

View Comments (0)