Before Applying for a Business Acquisition Loan, Make Sure You Take These 4 Steps
There are some considerable benefits associated with an existing business, as opposed to starting a brand-new one. For one thing, you can literally inherit a built-in customer base rather than trying to slowly acquire a legion of loyal followers on your own. If you are thinking about acquiring an existing business through merger or acquisition, here are four essential steps you should be sure to have in place beforehand.
Get your credit score in good shape
You have a better chance of being approved for a business acquisition loan if you have a credit score above 650, and if you have partners, they will need to meet that same criterion. If you’re below this standard, take some time and repair your credit before proceeding.
Gather up your tax data
Any loan for mergers and acquisitions will always be significantly delayed if you don’t have all the relevant tax information readily available. Before you even apply for your loan, make sure that you and any partners have tax information from the last three years ready for review.
Obtain a letter of intent
Make sure you have a signed letter of intent from the owner of the business to be merged or acquired through the loan. This will provide proof to the lender that both parties are on board with the proposed merger or acquisition, and that there will be full cooperation throughout the process.
Expect to use personal assets
Any lender considering a loan to you for mergers and acquisitions will want to know that you have a personal stake in the transaction. As these proceedings go, it’s fairly typical for the initiator to invest 20% or more of his/her own personal assets into the project. If you do a good job on these four preparatory steps, you will enhance your opportunity for being approved, although approval will still depend on several other important factors such as your business condition, creditworthiness, and amount of the loan.
Get working capital through Commercial Capital Lending
If you lack the funding for a merger or acquisition that would take your business to the next level, we may be able to help you. Contact Commercial Capital Lending as soon as possible to inquire about a business acquisition loan.