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5 Benefits of Buying an Existing Business

  • October 11th, 2017
  • Brandy Jesperson

Financing to purchase an existing business might be easier than borrowing to start from scratch.

I love listening to podcasts. My favorites are How I Built This and Masters of Scale where the hosts discuss how well-known companies got their funding and scaled their businesses. As someone working in the small business community, I find these origin stories fascinating. I’ve also observed that more and more entrepreneurs like the idea of building a business more than running a business. As a result, they’re often looking for an exit strategy where they can sell their budding start-ups to eager buyers.

As a potential business owner, there are a lot of benefits to buying an existing business.

  1. You are taking over an operation that’s already generating cash flow and profits.
  2. You have an established customer base and reputation in the industry.
  3. You have employees who are familiar with all aspects of the business.
  4. You already have a successful formula for running the business including procedures, systems, and policies.
  5. Typically, an existing business comes with legal rights like patents and copyrights which can end up being very profitable.

All of these pros certainly help your ability to acquire financing for your purchase. As you know, lenders are risk averse. They want their clients to have a healthy credit score, a history of on-time payments, and collateral. Collateral is often the hardest part of this equation, but buying an existing business solves that. In fact, there are traditional lenders who prefer to finance small business owners who are purchasing an existing business—provided they’re willing to put down somewhere between 20 and 50 percent.

Purchasing an existing business isn’t for everyone. Buying a business can be more costly than starting from scratch. However, it’s often easier to get financing to buy an existing business than to start a new one. Before you make your decision, weigh your options, and talk to a lending professional. An online marketplace is a great place to start when you’re looking for the best acquisition loan or startup loan to suit your needs; you can examine the pros and cons of a variety of loan products from a variety of lenders, all in one place.

 

Lendio’s funding managers are experienced with a wide variety of funding options for a wide variety of business needs. From purchasing a business to getting equipment, Lendio can help you get the money you need.

See Your Funding Options

About the Author

  • Brandy Jesperson

Comments

  1. would like to start and expediting business and lease box truck to fedex

  2. My boss has offered to sell one of his locations to me, it is a franchise. I have tried with the SBA 7a program and have been denied because his other locations are a tied into his financials. I have been working in the location he wants to sell and it does turn a profit. I have been denied at my bank as well. I am at a loss of how I get get the financing. I have 20% down and a great business plan. TY please help!! Thank you Tracy

    • Hey Tracy!

      If you sign up for free with Lendio, we’ll partner you with a loan specialist to help you find all of your loan options!
      Thanks!

      Erik

  3. Looking for a loan to purchase an existing bowling alley.

  4. Hi!

    Do you help finance established pool cleaning business routes? I’m interested in purchasing one here in Southern California. I do not have any collateral.

    Thank You,
    Catherine Thompson

    • Hey Catherine,

      You can try signing up above, and we can find what options you have! Thanks!

      Erik

    • Hey Catherine,

      You can see all your business loan options by filling out the application at //www.lendio.com/signup. Thanks!

      Erik

  5. When someone fills out your online questionaire, do you run a credit check? If so, is it a hard hit? Thank you.

    • Hey,

      Nope, there is no credit check until you actually apply for the loan. Seeing your loan options is free and we don’t run your credit. Thanks!

      Erik

  6. Looking to purchase an existing fitness center. Purchase price would be $125k. Place has over 200k in equipment with 189k spent on technogym new equipment 1 year ago paid in full.

    Gross income 18k per month.

    I am willing and able to put 20-30% of my own money and borrow the rest. Will be owner operated. I have a Bs in Mgt and have managed sports clubs and fitness center for over 10 years as a sports department, fitness department manager and 2 assistant general manager positions. My partner is a DMP and has a Bs is Biology and physiology.

    We have both been private trainers in the past and have exercise physiology background.

    • Hey Elio,

      You can start working with our loan specialists today by submitting your information at lendio.com. Thanks!

      Erik

  7. I have been managing a business for a little over a year now. It is a motel with the potential to have a very high income, but the owner has the rates set well above what they should be, so the profits have been low. He has been encouraging me to apply for a loan to purchase the motel from him because he would like to move onto other ventures. I am very much interested because of the potential the business has, but my credit is poor, I have no assets, and I only have $10.00 in savings. I really want this opportunity, but I don’t know if I should start the process or not. My income is extremely low so I will not be able to fix my credit or improve my financial situation unless I find employment elsewhere, or purchase the business. What would you suggest I do at this point?

  8. I have been turned away from sba 7 (A) due to the fact that I want to buy into a very successful construction company that is expanding its operations . The Buy in is for 600k for 20% ownershipand I am willing to put down 10%. My business partner and I both have careers that 7 (A) would have considered as working capital . The loan was going to be used for expansion and equipment . My credit and partners credit are both fair but have zero collateral. This is the opportunity of a life time for us and would hate for it to run away from us . Can you please help ?

  9. I am interested in purchasing a roller skating business that has been doing well for over 10 years. I have worked there as a DJ for 10 years and the owners would like to retire soon , and have asked me to buy it. Is this something workable with your lenders?
    Thanks! Dan

    • Hey Dan,

      You can get started and talk to a loan specialist by filling out the form on this page, or go to http://www.lendio.com. Thanks!

      Erik

  10. I have a chance to purchase an established business for 30 years. I have shot credit though, any suggestions ?

    • Hey Mike,

      There’s a lot of factors that determine loan worthiness, not just credit. If you want to check out all your loan options, you can go to lendio.com. Thanks!

      Erik

  11. I have read the comments above and I am interested in seeing what you have to offer in order to help me acquire an existing profitable business. Thank you.

    • Frank, We would love you help you obtain the funding you need to purchase an existing business. Please fill out the form on our homepage //www.lendio.com/ to be instantly matched to funding options that will best fit your business needs.

  12. I am interested in buying a small business that i have worked for eight years. i only need $75,000 and i have excellent credit, but so far I cant seem to find a loan officer who is interested in such a small loan amount. What do I do?

    • Gary, We would love you help you get the funding you need to buy the small business. Please fill out the form on our homepage //www.lendio.com/ to be instantly matched to funding options that will best fit your funding needs.

  13. I am wanting to purchase an established FedEx route business that currently meets the new ISP requirements. Purchase includes trucks and equipment. I have been a contractor before and an approved driver for over 10 years. I know the business inside and out and understand the requirements. Please let me know what I need to do to see if I qualify with your company to make this happen.
    Thank you,
    Miranda Crosby

    • Miranda,

      We would love you help you see if you qualify for a business loan to make this a reality. Please fill out the form on our homepage //www.lendio.com/ to be instantly matched to funding options that will best fit your business needs.

  14. I am interested in buying a pre exsisting business. I need to borrow 30,000. It has positive profit for last several years. I have been employed by the company as manager for 4 years. I have no collateral but would love to own the business. Credit score is roughly 645

    • Shilene, Thank you for your comment. My apologies for the delay in my response. Please fill out an application here and one of our funding managers will be in touch with you to walk you through the process.

  15. Miranda, were you able to secure a loan for the FedEx route? Did you go through the SBA? I am currently in the same situation of purchasing a FedEx route, but the broker we are working with is telling me that I will be unable to use an SBA loan (which I have already pretty much been guaranteed as long as the books check out). I am thinking that maybe there is something the current owner does not want the SBA to find, or maybe he is right. Could you please let me know which route you took?

  16. I’m interested in purchasing an existing School Bus Company. It has a 30 year history. $700k revenue, over 200k cash flow, and an asking price of $755k. I have excellent credit. I just do not want to part with a lot of money out of pocket. The current owner is willing to work with me on seller financing. This is what I have always wanted to do. I have been researching so many loans. The business has no real estate. I own a few rental properties. I want this to work.

    • Hello Justin,

      There are many options that could help you. My suggestion would be to sign up ( https://www.lendio.com/bp/signup) and allow one of our Funding Managers help walk you through the process and find which loan option will be the best fit for you. We will be happy to help you and answer any questions or concerns along the way.

      Thanks!

  17. I need 4 million to purchase an existing 33 rm motel, 8 bay carwash and fuel station

  18. I am a traveling nurse and my boss who is the business owner wants me to take over the business and buy it from her, she just wants to retire. The business of travel nursing is booming and the sky is the limit. I would be keeping the same business name and everything. She has been offered $127k by other like businesses. She has indicated she would take a lot less from me. My credit is bad and i do not have any way of coming up with a down payment. Could you help me

    • Hey Tom,
      Without more information from you, we are fairly limited in what we are able to tell you. But our funding managers are excellent at helping people get the funding they need. If you submit an application (don’t worry, it’s free and won’t affect your credit), our funding managers can help you through your your search for business funding.
      Feel free to apply here: ( https://www.lendio.com/bp/signup)

  19. There’s 4 businesses I would like to purchase and combined into one

    • There are a few options that could possibly help you out with your plan. I would recommend visiting this link and reading up about business acquisition loans ( https://www.lendio.com/business-loans/acquisition-loan/). If this sounds like something that would work for you, or you still have questions, sign up for free here https://www.lendio.com/bp/signup and one of our awesome Funding Managers will help you with every step of the process. Good luck on your venture!

  20. My son works for a Bounce House rental business, the lady that owns it, is wanting to sell , it can be a better thriving business, with the right management. Would like to purchase business.

    • Sounds like a good opportunity for you! We’ve helped many people obtain the funding they needed to purchase an existing business. If you submit an application here: https://www.lendio.com/bp/signup
      The application is free, and won’t impact your credit.

  21. I want to purchase a healthclub that has the potential to have a very high income, but the owner has the rates set well above what they should be, so the profits have been low. She has been encouraging me to apply for a loan to purchase the healthcub from her because she would like to move onto other ventures. I am very much interested because of the potential the business has, but my credit is poor, I have no assets, and I only have $10.00 in savings. I really want this opportunity, but I don’t know if I should start the process or not or how to go about getting funding for the downpayment.

    • Our funding managers can give you a better answer after talking with you and getting more information.

      You can go ahead and apply here: https://www.lendio.com/bp/signup

  22. i have poor credit, i have been working on bringing my score up. i would love to buy a business. Is this possible?

    • There’s no way to tell without seeing more of the whole picture of your situation. Generally, your credit score is one of many aspects that lenders look at in determining whether or not to approve your application. You can feel free to submit an application through Lendio. With our marketplace of 75+ lenders, there is a chance we can find something for you. But without the background and hard data, we can’t really give a straight answer to your question.

  23. Would like to purchase a laundromat in good area.In business many years-willing to train me.Also willing to finance a good portion of the amt.Dont have money -credit is good-Havent gone to meet him yet or see the laundromat.I feel under these circumstances a loan-down payment is out of the question.Hes asking 1/2 million-it does net $309,400 after all bills are paid.He has 4 employees-I work 6 days a week.But want to learn the business.What do you recommend?My email is [email protected]

    • Hey Debra. Sounds like this is a great opportunity! I would reccomend submitting an application through this URL: lendio.com/bp/signup
      It’s free and won’t affect your credit. We work with over 75 lenders, so we may be able to find you a loan that suits your needs.

  24. My husband and I are trying to purchase a business that is already well established. The loan and business would be in my husband’s name. His credit score is going up, but not yet where we want it, Can we still apply?

    • You can absolutely submit an application through our site here: lendio.com/bp/signup. It’s free, and we work with over 75 lenders, so qualified borrowers usually have a few options to choose from.
      We’ll look forward to seeing your application and hopefully getting you the financing you need!

  25. I’m taking over an existing childcare center that is doing very well. What do I need to secure funding and what documents do I need from the business.

    • Hey Tanya! Congrats on the business opportunity! Our funding managers can help walk you through the process step by step. Give us a call at (801) 858-3322 and we can answer your questions.