V. Qualified Buyers Are Your Targets
We have already discussed financing and now it is important to understand who qualifies for financing. One of the biggest misconceptions is that small business loans are based on credit. While credit runs a distant third there are two more important factors used to determined a qualified buyer.
The very first credential is relevant experience. The buyer must have experience in your industry or the ability to bring on a partner with experience. And a resume is one of the first things That a lender asks for regarding financing. Ask yourself would you provide financing to a buyer with no experience in running your type of business? We didn't think so.
The second credential is liquid capital. For a buyer to qualify they must have at least 20% liquid capital (money readily available) of the asking price. This is also the second credential of lenders when determining financing. If they do not have the requisite 20% then they will need to bring on a partner who has it.
Finally credit gets involved. Most lenders will look at a prospect meeting the first two requirements who has a fair credit score (640) and up. So as you can see this is last on the list rather than first.
Finding people interested in buying a business is easy but are they motivated and qualified?
Page 5 of 5
Your Friends at NAABB Provide You This FREE Online Coaching
for Envoy Business Alliance
THE BRAND POWER: We have over 120 NAABB Certified Brokers and Agents across 36 USA States. We reach places that the others cannot. All NAABB Broker Owners have completed the industry's most comprehensive training program that includes ongoing training and support. We know what works now! Our nationally renowned philosophy of business owner representation rather "listing" is slowly turning an industry with a negative stigma into an industry that can once again be trusted. Our goal is not to be the biggest OR the best. No, our goal is for 100% of our clients to walk away wanting to brag about what a great job that we did!