Financing a Business Purchase

Ideas for where to look for funding.

Short on cash? Try these alternatives for financing yourpurchase of an existing business:

  • Use the seller's assets. As soon as you buy thebusiness, you'll own the assets-so why not use them to getfinancing now? Make a list of all the assets you're buying(along with any attached liabilities) and use it to approach banks,finance companies and factors (companies that buy your accountsreceivables).
  • Bank on purchase orders. Factors, finance companies andbanks will lend money on receivables. Finance companies and bankswill lend money on inventory. Equipment can also be sold, thenleased back from equipment leasing companies.
  • Buy co-op. If you can't afford the businessyourself, try going co-op-buying with someone else, that is. Tofind a likely co-op buyer, ask the seller for a list of people whowere interested in the business but didn't have enough money tobuy. (Be sure to have your lawyer write up a partnership agreement,including a buyout clause, before entering into any partnershipagreement.

Excerpted from Start Your Own Business: The Only Start-Up GuideYou'll Ever Need

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