How much can I borrow to buy a business?

In general, the borrowing amount for bank loans varies based on the type of loan. It's typically lower for unsecured loans and higher for secured loans. Some banks offer up to $250,000 for unsecured loans and loan amounts over $1,000,000 for secured loans. The exact amount you're able to borrow when buying an existing business comes down to a number of factors. These include the business's financials, how much the business is valued for, whether or not you're also purchasing property and the supporting documents you provide, such as business plans and cash flow projections.

How do I value the business I want to buy?

Valuing a business can be tricky, and a lot of factors need to be weighed up. Some of the most common include: The current marketplace value of similar businesses Return on investment The business value of the assets, including both tangible and intangible assets, goodwill and depreciation The estimated cost of starting a similar business from scratch The projected future profit of the business Given that valuations can be a complex process, you should consider getting professional advice from your accountant, business advisor or business broker.

What should I expect from the application process?

Here's what the loan application process for the purchase of a small business will look like: Lodge an enquiry. You've carefully compared your options and found a loan you think is right for you. The first step is lodging an enquiry. To do this, click "Go to site" on the lender of your choice. Most online lenders have a short online enquiry form for you to fill out. Some lenders may require a phone call instead. Almost all lenders will get back to you with more information within 48 hours. Provide key information. Your lender will want your business plan, including financial figures and information about the business you are hoping to buy. This generally includes data about its profitability, cash flow, sales forecasts and growth potential. The lender in question will be looking for evidence that the business and plans for growth are sound. This is to ensure you're able to repay the loan. Provide equity. Depending on the lender, you may need to invest some of your own money into the purchase of the business. This reassures the lender you're invested in the company's success moving into the future. Provide proof of security. If you're applying for a secured business loan, you will have to provide details of your asset security, as well as proof of ownership. This may include a copy of the deeds to your house or a commercial property you own, or an invoice from your car dealer, etc. Receive funding. If everything has been approved by your lender, you will receive the funding you require for your new business. You may be able to apply for further business funding in the future, should you require it. This will depend on the loan you opt for and the arrangement you have with your lender.