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Home > Tools and Resources > Ask the Expert > Financing a Business Purchase

Financing a Business Purchase

By Richard Parker | Diomo Corporation
Contact Richard Parker | Visit Website | About The Author

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Question:
I have very little in the way of capital, other than home equity, to invest in a small business. I want to buy a small business but don't want to use home equity, which will be used later to partially finance my kids college education. What other sources of financing are available and which is the best?

Answer:
Unfortunately, buying a business is not like the "no money down" real estate infomercials you see on TV. You will need to fund the down payment at the very least. Your best option will be seller financing and in the best case scenario, this can be around 50% of the purchase price. Surely there are cases where the seller may finance more, but it's rare. I fully understand your desire to not leverage any of your assets and I'm definitely not an advocate of being reckless. But, if you're not willing to leverage your assets such as your house on a business that you believe that you can grow, then chances are that the particular business, or business ownership itself, may not be for you.

Buying a small business requires some risk. Clearly, with the right information you can dramatically reduce the risk and eliminate the guesswork. But, entrepreneurship requires you to bet on yourself. You need a burning desire to succeed and belief in yourself to do so. You'll find that the most successful entrepreneurs have all put it on the line at some point to be where they are today.

Get more expert advice in Richard Parker's How To Buy A Good Business At A Great Price - the most widely used reference resource and strategy guide for buying a business.

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About The Author
Richard Parker is the author of: How To Buy A Good Business At A Great Price, the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center.

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