Would a business and all its contents including garage/deli stand for the down payment of a loan?

we are purchasing this business which is a great investment. The asking price is quite large and we really dont want to put our home up for collateral. The business is a gro/deli/postoffice/garage/gas station together plus a small trailor park. 6-8 trailers on 2 acres of property. what I would like a little more insight on is if the asking price is 550,000 will all of these assets stand as the collateral or will be have to still come up with some cash down. Someone said that if it appraised for the value we would not have to have a down payment also that it would be based on the average income that the business brings in. Can anyone help answer my questions.. We are in the waitng process and its nail bitting!

Answer:
For a few hundred dollars you can hire a property manager to perform an assessment of the rental situation; do you know anything about liability control? Are you ready for tenants to call you at 3 am wanting you to get their water turned back on? Are you prepared to carry out an eviction? Think about it.

Your lender sincerely does not want to lose money on this loan. It will perform a valuation of the assets themselves in case of foreclosure and determine if the business will provide enough income to pay the interest on the loan. The lender may ask for a down, but may not, it's up to the lender.

Calculate the payment on a $550k loan over the term of the loan based on the interest rate; has the business produced at least that much income after taxes for the last few years? Have there been lean times? Have there been any big, one-time expenses? Are the buildings in ship-shape or does some of the equipment (A/C, heat, tools) need replacing? It all adds up.

Hire a consultant in the Commercial Real Estate field (Yellow Pages, local). An expert analysis on this property is required before you make the sale. Your question does not state whether or not you have ever run a business and you propose to run several kinds of businesses all at once.
Renting to people has its own special problems, really you need to find out the downside of renting land before jumping into it.
it comes down to the appraisl , income a sound 5 year business plan with a good credit score.
First of all it sounds like your business type will require at least 10% down payment. There is no such thing as 100% financing by commercial bank. Sorry. And there are no grants. See http://www.blquest.biz/warnings.htm.

If you use equity in your house wisely you will not need to come up with additional collateral. Do a cash-out refinancing with the power mortgage (http://by0835.wlgweb.com/lending/). – it is one of the cheapest way to borrow money for down payment.

You can compute available business collateral using the following formula:

Collateral = Real estate value*0.8 + Equipment value *0.5 + Inventory *0.1

Business performance IS additional collateral too. But it is hard to explain how it works in this short answer.

The approximate business value can be calculated using this formula:

Business Value = Net Income * 2 + Real Estate Value + Equipment Value + Inventory Value.

For more information about buying business see links below.

Sincerely,
Marina Lando
President
Business Loan Quest

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