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Financing Your Business Part 3
18
Dec 2013

Financing Your Business Part 3

By webmaster

Commercial

One method of financing your business is through Commercial Lending. Commercial Lending is simply Bank lending. This form of financing is typically used by established Businesses with a solid financial history of at least 2-3 years. If you have a substantial sum in your personal accounts your bank should be able to work with you on a loan. They may consider using your personal account as collateral. Contact a Business Banking Advisor to learn how your Bank can help.

Private

Private lenders are usually wealthy individuals or groups who pool their capital in order to make loans. These lenders will usually be riskier than Commercial Lenders. For this reason they tend to charge higher interest rates.

The issue with Private Lending is finding it. In many cases you would have to know or be introduced to an individual private lender and convince him/her of the need of loan, the expectations the loan provides, and your ability to pay them back or your willingness to put up collateral. As such this form of lending is not commonly used when financing your business; if you do have access to Private Lending you may want to consider it.

Seller Financing

Seller Financing is typically the easiest form of financing to get and allows for a quicker Closing. In this financing arrangement both the Buyer and the Seller have a vested interest in the success of the Business. With this two party interest, the Buyer may have more accountability to the Seller than in other financing options.

Some protections can be put in place for the Seller to prevent having to rescue the Company. The Seller can place controls on the Business and require reports on the Business. In some cases the Seller can even take the Business back sooner if certain agreed upon criteria are met. The downside for the Seller is they may end up getting the Business back and may inherit a mess when they do.

 

This concludes our series on Financing your Business. We hope you found it informative; if you would like to learn more about these options feel free to contact us

 

Join us in January for more more blog posts. In the meantime the CBA Team wishes you a Merry Christmas and a Happy New Year!

Business Broker

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