Business buyers throughout the country are building wealth rapidly. They have learned how to use SBA loans to acquire profitable businesses. When the SBA programs are used the way intended, a buyer can obtain money for start up business loans and acquire a business that is producing proven cash flow.
This method when used to acquire a solid business can immediately provide up to a 100% return on the active buyers cash investment.
How is that possible?”
Actually, it is fairly easy and it is happening every day throughout the USA….. What a country!
Here is how it works?”
The market value for a profitable business is typically between 2.5 -4 times the proven cash flow. In other words, a business producing $300,000 in cash flow to an existing owner may sell in the price range of $750,000 – $1,200,000. For example we will use $1,000,000 as a sales price.
If a buyer has 150,000 in available cash, good credit and a background that supports the type of business being acquired, an SBA loan can fund the balance including the closing costs. At today’s interest rates with a 10 year amortized loan the annual debt service will approximate $165,000. In other words, you invested $150,000 and you acquired business income of $135,000 “after debt service.”
Lets assume you decide to hire an experienced assistant to help manage the business at a $50,000 salary with profit improvement bonuses annually.
Your ROI for a near passive business would approach $85,000 on a $150,000 investment. Lets assume you and your experienced assistant can manage, improve and grow the business…the Return on Cash Investment grows and the value of the business you acquired also grows in value. Acquiring cash flow and building business value is one of the fastest ways to build wealth- new millionaires are being created regularly following this formula.
We have helped hundreds of clients identify, qualify and acquire profitable businesses using SBA loan programs. However, solid business valuation is a critical part of the process. Contact us at [email protected] to understand how this buy-side due diligence process can work for you.