If you are looking to purchase a service-based business but lack the capital to do so, you are not alone. Many people have the expertise to run a business but lack the funds required to make the purchase. However, there are ways to acquire the necessary funds, such as through SBA financing. In this blog post, we will discuss how to purchase service-based businesses using SBA financing.

What is SBA Financing?

The Small Business Administration (SBA) is a government agency that provides support to small businesses in the form of loans, loan guarantees, contracts, and other forms of assistance. SBA financing is a loan program designed to help small businesses obtain financing that they might not otherwise qualify for through traditional lending channels.

SBA financing is available to businesses that meet specific eligibility criteria, such as being a for-profit business, operating in the United States, and meeting size requirements. SBA loans typically have more favorable terms than traditional bank loans, including lower down payments, longer repayment terms, and lower interest rates.

How to Purchase Service-Based Businesses Using SBA Financing

If you have found a service-based business that you would like to purchase but lack the funds to do so, SBA financing might be the solution. Here are some steps to follow:

1. Determine Eligibility: The first step is to determine whether you are eligible for SBA financing. Check the SBA website for eligibility requirements and use their online tools to find an SBA-approved lender.
2. Gather Information: Collect all the necessary information about the business you wish to purchase. This includes financial statements, tax returns, and other relevant documents.
3. Apply for the Loan: Submit your loan application to the SBA-approved lender. The lender will review your application and determine whether you qualify for the loan.
4. Equity Injection: As mentioned in the video, you will need to provide an equity injection of at least 5%. This can come from your own funds, a gift from someone else, or from an investor.
5. Close the Deal: Once the loan is approved and the equity injection is secured, you can close the deal and take ownership of the business.

Conclusion

If you are looking to purchase a service-based business but lack the funds required to do so, SBA financing might be a good option for you. With SBA financing, you can obtain a loan with favorable terms and purchase the business you want to run. Remember, there are other ways to obtain the necessary funds, such as through partial seller financing or by finding an investor. If you are interested in exploring your options, reach out to us.