Help! I've been in business about 10 years, but always leasing space. Recently I leased a condo office space with an option to buy it by the end of 2005. I would like to exercise my option to purchase the space I'm currently leasing. The sales price is around $500,000. My problem is I'm not sure I have enough money to swing the down payment, and I will need a loan on the rest. Only the security deposit of $3000 will be credited toward the purchase. I have about $94k in the bank with $60k in the next 30days accts receivable. My customers are normally prompt in payment. My minimum monthly expenses average $33k. I have a Line of Credit of $100,000 with about $25K left in it to draw on (collateral for the LOC is my home - equity is $40K). The LOC is my only current business debt. I do have machinery that is paid for. I previously had more cash on hand but used it to pay down several credit cards. Now I'm wondering if I should have left the credit card balance as was and used the $20k toward a down payment. My plea for advice/questions: Do I have enough for a down payment? Should I re-allocate my assets; use the rest of the $25k from LOC for down payment, or is that okay to do? Any suggestions what I can do to swing this in my favor? Thanks in advance for any feedback.

Newatthis

My take:

You have enough for a down payment even if you go with a 20% deal. However, you might not want to do this since it will take away all of your liquidity. You might want to look into an SBA 504 loan that would allow you to get in with only 10%.

The big question here is “ does your business generate enough cash flow from operations to repay the proposed debt?”. That is something that can not be answered without looking at your financials.

Do yourself a favor and look into the 504s…. I mean it

Admin is right. SBA is a good solution for you. You would need to occupy at least 51% of the space (I assume by your note that you would occupy 100%).

You may also want to consider lease-back financing on your equipment to free up more of your LOC.

Did you have your tax advisor do an analysis to see if owning is a better deal for you than renting?