Looking to Buy

by Bruce
(Torrance, CA)

Has the Credit Crunch made it more difficult for buyers to finance business acquisitions? Does the current economic condition mean that it is a buyer's market?

Comments for Looking to Buy

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Dec 19, 2008
Buying a Business in a Recession
by: Ron

Hi Bruce-

Since October, I have been getting those questions quite a bit. To answer your questions:

1. Credit Crunch:

Yes credit has tightened but it is still available. SBA 7a financing (business acquisitions) is backed by the federal government but it is generated and underwritten by banks. Banks are feeling the squeeze and so there are fewer lenders lending. With that being said, for the businesses that qualify for SBA loans (not all do) the tight lending market has not kept us from closing any deals. Expect to see more financing available in Spring of 09.

Many business buyers seek to pull money out of their homes to finance biz deals. That is also tighter but still available.
Bottom line: Financing is still available - it just may take some more work to line it up.

2. Economic Climate:

The value of businesses (and whether it is a good buy) really have more to do with the business on a micro level rather than the economy as a whole. Yes, many businesses are having a rough time now and some may not make it - but there are many that are still going strong and some that are growing. It all depends on the individual business and industry.

Buying a business is a recession may prove to be a very wise investment. The price of the business will be based on what the business is currently doing. If it is holding it's own in tough times that bodes well for it when the economy turns around. Name of the game is to be selective and do your homework.

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