Bed & Breakfast purchase with bad credit

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commercial loans for bad credit
Posted by: brenda Mar 23 2004, 01:55 PM
I have the chance to purchase a bed and breakfast business that is currently owned and operated by friends of mine.However,this is the dillema,I have no money down and bad credit.Is this a hopeless situation or is there help for me somewhere?
Posted by: loanuniverse Mar 23 2004, 03:23 PM

So how good of a friend are these friends of yours? How much is the sales price? and what kind of debt has to be repaid from the proceeds? You said bad credit, but do you know how bad?

The reason why I ask you these questions is because the most likely way that this could be worked out would be with your friends financing the purchase either fully or partially.

Assuming that the purchase of the business involves the purchase of the property, then we are talking about a substantial amount of money. From the point of view of a lender, the business has to be making enough cash-flow to repay the loan. This means that historical financial information has to be analyzed.

They are also going to look at your experience running a similar business or at least any kind of business.

Could this be done? I couldn’t tell you without looking at the whole situation and assessing the business and its capacity to repay the debt. At best, you will have to get your friends to finance your down payment {probably around 20%} and this is only talking real estate, if the business is making a considerable amount of money, I am sure your friends would want a premium on top of just the real estate value.

I think you need someone to go over the numbers with you in order to give you better feedback.

Good luck and hope this helps.
Author: Commercial Loan Underwriter