I have a situation where I am trying to get back on my feet after a loss of my business in 2002. Had to file chapter 7 and I have no available cash at this time. I do have over 15 years experience in retail business ownership and management. I have a contract on a profitable retail business doing a net profit of over $300K this year. Land, bld. and all assets valued at $500K. Offer is for $425K and seller may take a note. I had a lender who says he was going to provide the loan and now I hear nothing from him. Am I chasing a dream or are there any lenders / financing programs/ alternative financing/ equity partners, etc. that would actually provide a loan based on assets and cash flow. There is so much talk out there but no action. With all my business experience I am unable to locate a job and it seems there should be a way for me to obtain a loan for a viable, profitable business. eschulze@woodsidetrails.org

Erland:

Unfortunately, I have bad news. Not trying to be mean but this will help you understand why getting a lender to finance this will be next to impossible.

” … after a loss of my business in 2002…..I do have over 15 years experience in retail business ownership and management.” The benefit of business ownership and experience is pretty much wiped out by the business going under. In addition, the personal bankruptcy will make you a guarantor that would add no strength to the request.

” … I have no available cash at this time.” This makes it undoable in the eyes of lenders as most will think that you have nothing at stake.

” … doing a net profit of over $300K this year. Land, bld. and all assets valued at $500K. Offer is for $425K and seller may take a note…..” That kind of profit is not generated by a business that is sold for $425,000. In my eyes the whole transaction seems suspect now. If you can find a business being sold at that price that does that kind of profit and it is something legal, it would be a miracle. And the seller is willing to provide partial financing? You would have people lined up for blocks.

” … I had a lender who says he was going to provide the loan and now I hear nothing from him. …..” I seriously hope you did not give any money upfront. A lot of times lenders can tell you that they are interested, but it means that they want to hear more details.

” . Am I chasing a dream or are there any lenders / financing programs/ alternative financing/ equity partners, etc. that would actually provide a loan based on assets and cash flow. …..” A lender would only consider a loan if there is some equity. You have to understand that a lender is above all a salesman, which is trying to sell you something. The problem is that he can not sell it to everyone, but in order to make the most sales he has to look at as many deals as possible. Do not fall for the hype.

” . With all my business experience I am unable to locate a job and it seems there should be a way for me to obtain a loan for a viable, profitable business.. …..” Be careful at people preying on you. If you are unemployed, you are one of the favorite targets. The numbers that you gave me on the business profitability and price do not seem right. An unscrupulous broker could try to take you for a few hundred or thousand by offering you a glimpse of hope. This can not work as a loan with no equity. The only reason why it would work is if the business was really that profitable, but then why sell it at that price and accept a note as partial payment? Other than the seller having a terminal illness it just does not make sense to me.

Of course loans are not paid by income, but by cash flow, but I am assuming that income is equal to cash flow in my answers.

Good luck