Are you a broker or business owner looking to sell a business? You have probably come across the term pre-qualified before. Do you need to get pre-qualified for a loan to sell a business? No, it’s not a requirement, but in these challenging economic times, having the assurance that financing can be secured will attract more potential buyers. A Small Business Administration (SBA) loan is attractive for many business owners because there are many benefits with little to no fine print.
What is SBA Pre-Qualified?Buying a pre-existing business has advantages over establishing a startup, starting a franchise, or other ventures that require starting from the ground up. As such, for many excited entrepreneurs, it is the preferred option. A business likely comes with existing cash flow, a customer base, trained staff, and proven processes.However, savvy entrepreneurs are looking to get the most bang for their buck with a business purchase. Being SBA pre-qualified helps give confidence to potential buyers that they can secure financing and grow the business that is being sold– that it will be a wise investment.SBA loans offer some of the best financing options with small down payments and low-interest rates backed by the government. Due to this, they are appealing to any intelligent business investor.Getting pre-qualified for an SBA loan can make the sale of a business smoother. It will help set the business apart as there are not a large number of companies currently for sale in the U.S that are SBA pre-qualified (not necessarily because it is hard to get, but because they haven’t thought about it).
10 Reasons Why To Get A Business for Sale SBA Pre-Qualified
- Thorough high-level underwriting of the business to get everything needed up front so it doesn’t hold things up later.
- Instantly know that your business listing is financeable and what a financing structure would look like for a potential buyer.
- The business listing won’t just be a regular listing, it will be an “SBA Pre-Qualified Listing” and really stand out from the competition.
- Give buyers the added confidence that they will be able to finance this transaction.
- Perform all the heavy lifting beforehand, not when the buyer’s stress level is high towards the end.
- Term sheets are so thorough, they are almost as strong as a commitment and mostly turn into an approval.
- Rates and terms will be clearly stated on the term sheet so any buyer can see what to expect.
- Provides a buyer profile to target the right buyers based on researched recommendations.
- The pre-qual will be from an actual financial institution that is in the market. This gives the business added credibility to potential buyers.
- No longer rely on cash buyers or seller notes to fund a deal, especially for businesses over $500,000. That limitation is now lifted, the potential buyer can count on a reliable financing source.