Welcome to the Small Business Ideas Forum! We are a community of over 100,000 small business folks with over 163,000 posts for you to browse. We pride ourselves on being the friendliest forum you will find and we'd love to have you as a member of our community. Please take a moment and register for a free account. If you need any help, please contact Chris Logan.

Small Business Ideas Forum

Small Business Ideas Forum

A friendly place to share small business ideas and knowledge, ask questions, find help and encourage others that are involved in the small business industry. Topics include small business marketing, generating revenue and small business computing.

Go Back   Small Business Ideas Forum > Generating Revenue, Insurance, Taxes, Etc. > Small Business Finance
Register Search Today's Posts Mark Forums Read

Reply
 
Thread Tools
Old 12th October 2010, 01:30 PM   #1
bigdre90
Member
 

Join Date: Oct 2010
Posts: 9
Default Buying A Business With Real Estate??

Hey I've been wondering how the financing for a business would work when the property is included in the asking price? Is there different types of loans programs for this or would you have to do separate financing for the two? I'm real curious about this

bigdre90 is offline   Reply With Quote
Register or log in to remove this ad.
Old 13th October 2010, 07:21 PM   #2
ArcSine
Member
 

Join Date: May 2009
Location: Charlotte, NC
Posts: 45
Default

The odds are good you'd do better to finance the real property separately, for two reasons...

Your total cost of capital is almost always less when you 'target' finance the various pieces of the deal. Asset-based lenders are comfortable lending against inventory (for example); certain lenders are familiar with making subordinated loans against the cash flows of a business operation; banks' expertise is usually strongest in term loans against equipment and real property, and short-term credit lines. A lender that's financing a particular asset in which it has specialized expertise and experience will usually give a better rate than one being asked to step out of its comfort zone.

Second, when a single lender or investor is carrying the bag for the whole deal, they correctly perceive that scenario as involving higher risk, and their required interest rate will price in that "it's all on me" risk. Compare that with a scenario in which two or more lenders are each financing a subset of the whole deal. There's less risk exposure to each, and being one of several gives a psychological feeling of additional safety. Hence, you'd probably be looking at lower interest rates.

Clearly, there's more work involved in rustling up, and then dealing with, multiple lenders. Offsetting that is the fact that it's harder to convince a single lender to bankroll the whole deal. Although more time consuming, it's likely to be an easier row to hoe if you convince one lender to take one piece of the deal, then a second, then...etc. And, the second's easier than the first, since he sees that another lender is 'already in'. By extension, the third (if applicable) should even be easier to land than the second, and so on.

Best of luck with the deal!

__________________
...it was early and I was full of no coffee...
ArcSine is offline   Reply With Quote
Old 20th October 2010, 07:07 AM   #3
phanio
VIP Contributor
 

Join Date: Feb 2009
Location: Texas
Posts: 261
Default

It really depends on your lender. Most larger lenders and banks will separate out the collateral and create separate notes within the one loan facility. They will value each piece of collateral - then create a single encompassing loan for your needs.

Other, smaller, lenders may not be willing to do this - thus, you would have to find different lenders for each funding need.

Know that a real estate backed collateral loan is more expensive to to close but could also provide a lower overall loan cost with lower interest, etc.

If you are buying a business - have you asked the current owner to carry the note? You then only come up with a small down payment (say 10%) and finance the rest on a balloon note with the current owner.

__________________
Business Money Today - Small Business Loans
phanio is offline   Reply With Quote
Old 20th October 2010, 02:57 PM   #4
raydog
Member
 

Join Date: Oct 2010
Location: North Carolina
Posts: 11
Default

You should check out the SBA 504 loan program. It finances real estate and equipment at the same time. The advantage is that equipment is usually amortized at the real estate term, lowering your payment. The rate is usually competitive too, since a portion of the loan is funded at the government agency rate. Check with your banker, or the local SBA office.

raydog is offline   Reply With Quote
Old 15th November 2010, 02:10 AM   #5
howtofranchiseg
Member
 

Join Date: Aug 2010
Posts: 31
Default HIi

Quote:
Originally Posted by bigdre90 View Post
Hey I've been wondering how the financing for a business would work when the property is included in the asking price? Is there different types of loans programs for this or would you have to do separate financing for the two? I'm real curious about this
I think you should go with Franchise. From that you can earn from the owner's business' Prestige without doing any marketing.

So go with Franchise, Its so easy and beneficial.
i give you one reputed site for franchise
http://www.howtofranchisesystem.com

howtofranchiseg is offline   Reply With Quote
Old 3rd October 2013, 05:31 PM   #6
Hampers
VIP Contributor
 
Hampers's Avatar
 

Join Date: Jun 2010
Location: Hunter Valley Australia
Posts: 377
Default

Not as keen on franchise - I've seen many people go in expecting to have their hand help along the way when really you and only you are accountable. Go it alone and learn and be flexible and answerable only to yourself.

Next, try and untangle the property and business as best you can - bundling is a great tool if you are the bundler - not the bundlee.

Hampers is offline   Reply With Quote
Old 1st November 2013, 12:54 PM   #7
bethw
Member
 

Join Date: Feb 2013
Posts: 47
Default

Finding a source to lend you the money is one way to come up with the needed funds. There are businesses that offer loans to new owners of businesses. Family and friends could be another source of money. Another way to get the needed money is to take in a partner for the business.

bethw is offline   Reply With Quote
Old 17th May 2014, 10:06 AM   #8
DorseyEnsworth
Member
 

Join Date: May 2014
Posts: 16
Default

will you please tell us in details what is your asking price
in above given criteria ?

I doubt on it ... may be you visit here for more details

DorseyEnsworth is offline   Reply With Quote
Old 16th June 2014, 01:56 AM   #9
simon.boylan
Member
 

Join Date: May 2014
Posts: 20
Default Buying A Business With Real Estate

Quote:
Originally Posted by phanio View Post
It really depends on your lender. Most larger lenders and banks will separate out the collateral and create separate notes within the one loan facility. They will value each piece of collateral - then create a single encompassing loan for your needs.

Other, smaller, lenders may not be willing to do this - thus, you would have to find different lenders for each funding need.

Know that a real estate backed collateral loan is more expensive to to close but could also provide a lower overall loan cost with lower interest, etc.

If you are buying a business - have you asked the current owner to carry the note? You then only come up with a small down payment (say 10%) and finance the rest on a balloon note with the current owner.
I am agreed with "phanio". It really depends on your lender. Most larger lenders and banks will separate out the collateral and create separate notes within the one loan facility.

simon.boylan is offline   Reply With Quote
Old 1st July 2014, 03:14 PM   #10
lawebdesign
Member
 

Join Date: Jun 2014
Posts: 43
Default

Old thread but for anyone else in this situation, which is fairly common, sba is probably your best bet as someone mentioned previously.

The thing about separating the two is that you are going to have an extremely difficult time trying to finance the business without the real property to secure it.

just walk into a community bank and ask about their sba programs. they make a ton of money from these loans so you will be greeted with open arms.

lawebdesign is offline   Reply With Quote
Reply   

Bookmarks


Similar Threads
Thread Thread Starter Forum Replies Last Post
need help starting business racheldianatina General Small Business Issues 24 11th December 2015 07:12 PM
5 Qualities Of A Good Business Broker AngelBiz General Small Business Issues 5 5th October 2010 07:39 PM
Type Of Service Business To Start goblue20 What Type of Business Should I Start? 3 15th August 2010 06:01 PM
Financial And Business Workshop In Reno, NV nvbusiness Small Business Conferences, Seminars & Webinars 0 15th February 2008 04:05 PM



Thread Tools

Get Updates
RSS Feeds:
RSS Feed for Small Business Finance RSS for this Category Only: Small Business Finance

RSS Feed for Small Business Ideas Forum RSS for Entire Forum
Forum Rules


Sponsor


More Info
Small Business News
Small Business Articles
Small Business Resources
Small Business Software
Small Business Opportunities
Small Business Loans
Glossary
Link To Us


Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


Our volunteer moderators and their websites:
David Wallace
SearchRank - Organic Search Engine Optimization
Old Welsh Guy
Internet Marketing from Wales in the UK
torka
NineYards.com: Helping Businesses Do Business Online
Small Business Answers
Free help to grow your business.

New at Search Engine Guide
The 4 Types Of Website Traffic

New at Small Business Answers
Contractor Estimate - Cancel Contract - Bill of Sale - Evaluation Questions

Employee Evaluation Templates
30 Day Review - 90 Day Review - Annual Review - Employee Self Evaluation - Strength & Weaknesses

New at Small Business Forum
Unusual Ways To Promote Your Business

Crimson Fox
Graphic Design and Brand Promotion and the Brand Design Blog
St0n3y
Search Marketing Results - Pole Position Marketing!
Search Marketing Info - (EMP) E-Marketing Performance
Matt McGee
Small Business SEM - Web marketing discussion for small businesses.
Logan
Tiny Doors Frisco
Things To Do

At Your Business - Small Business Directory
Free Business Forms - Prewritten Documents

Free Links - Free Advertising
Free Guide - Online Directory
Debra Mastaler
Alliance-Link
The Link Spiel Blog
ChristineG
Free Online Marketing and Social Media Tips: Social Media Simplified for Small Business Owners
mktgbiz
Promotional Items Marketing
What I REALLY think!


Visit our small business websites
Small Business Forum | Small Business Answers | Search Engine Guide

All times are GMT -5. The time now is 01:27 PM.


Powered by vBulletin® Version 3.7.3
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Copyright 2004 - 2015 K. Clough, Inc. - Privacy