Hi There,
This post is regarding private finance for an established business acquisition.
I was not 100% sure about making a post on this site, as it is mostly regarding property investing, but I have been to these forums before and knew they are often a good source of innovative ideas / concepts.
I'm 20 Years old and have had an my own company for the last 2 years. I earn on average 100k per year, and turn over around 300k a year at the present time. My own business is secure and stable, I have a handful (15-20) of select clients that i deal with on a monthly basis, the business is growing slowly (this is not my primary focus).
I've decided that recently I wish to start investing and purchasing other established businesses. Recently in my local area, a company has come up for sale which myself and one partner (Older, with assets) have been investigating purchasing. The business in question is a franchise, and thereby have managed to secure 50% of the loan upon its own assets / goodwill etc.
poring over the 3 years of month by month sales of the franchise, my cash flow projections show that all loans to directors / the 50% franchise loan are able to be paid taking into account cash reserves etc. All my homework has been done – very throughly – the main problem comes down to finance.
Originally I was considering approaching two family members to try and secure around 100k for my share of investment into the company. I have problems with securing a loan through a financial institution mainly because of my age, and tax returns which are 'not up to scratch' even my own bank, which can see my high turnover, denies a personal loan to me – mainly because of my age (at least this was the impression I got).
I was quite happy, and can easily afford to pay off the loan at a much higher – personal loan interest rate 12%+ for instance. Is anyone aware of some other types of creative financing methods – perhaps private lenders who have less strict lending criteria? At a worst case scenario, even if the stable business i was purchasing was to go belly up i would still be able to pay off the loan from my original existing business that I am staying in.
Please advise. Any ideas would be welcomed.
Thank you for you help!!
Adam
Hi Adam
My name is Steven and I work with a very flexible and common sense lender.
We have a range of products which might suit you and as an example I could offer you our Signature Home Loan within which you may to qualify for a Lo Doc loan based on your self employed status of 2yrs.
Low-Doc
No-Doc
80%
70%
Security Value
$ 100,000
Loan Amount
$ 125,000
$142,857
If you have security in property then we have no problem lending to 80% LVR, as above, however if you do not then we can still work together however I would need more information; Franchise type and name for starters (I have an associate who deals lenders for this type of acquisition)
If you can provide me with some more specific detail then we can investigate further how to help you make this happen.
Steven Thompson
Mortgage Consultant 0400 361 580Wow that table didn't copy accross very well did it.
Try this
Low-Doc No-Doc
80% 70%
Security value $125,000 $143,000
Loan Amount $100,000Hi Adam,
Do you needd to raise the funds personlly, or can it be through the business. If you can raise it through the business there are a large number of different sorts of loan that might suit you. In terms of LVRT agains tthe purchase of another business, typically you can borrow 50% of the amount, but the actual LVR would be heavily dependent on cashflow of the subject business and your current business.
Regards
Alistair
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