How Much is Needed:
- A first-time buyer generally needs around 30% of the asking price, to close the transaction. Typical first-time investors are looking for a way to leverage their existing assets to buy a healthy and efficient FedEx business. In most cases, buyers are looking to utilize SBA financing. On top of the down payment
Down Payments and SBA/financing:
- These are out of the box loans for small businesses and typically require 15%-20% of the purchase price, as a down payment. Interest rates on these kinds of loans are in the 6-7.5 percent range but will be going up in the near future(2022).
Other forms of Financing:
- Other common forms of financing include ranges of seller financing, which typically require more than 50% down payment, or Securities Backed Loans, for buyers with a large portfolio of securities-based investments. Conventional financing is typically much more expensive than these other forms of financing. Cash is always an option but would not recommend this unless it is a great deal.
Working Capital:
- I always recommend my buyers to have at least 10-15% of the purchase price, in liquid capital, or low interest credit lines. This ensure that, as a new owner, you can float expenses in the short term, if anything unexpected happens. If you are buying into a low profit business, you may want to account for additional working capital for business improvements and to operate in a tough economy.