have purchaser for my business but they can't get loan approval

H

hizzy

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Hi All

Will try to keep this brief.

I am looking to sell my business to an employee of mine for the same price that I bought it for (150,000). She jumped at the chance, however she can't get a loan from the bank or credit union as she has no security for the amount.

She does have 40,000 of her own money, which leaves a shortfall of 110,000.

I don't want to put this business on the market as she has worked with me from day one, I have trained and mentored her and I know that she is the person to take it over.

Any suggestions would be gratefully appreciated.

Hizzy

Ps I spoke to my solicitor about a suggestion I have which is to let her buy me out over 3 years, however he said no.
 
Hi Johnjoda

No the business doesn't include the premise's. There is 7 years left on the lease with an option to extend the lease for another 35 years.

Hizzy
 
A 40k deposit and the balance over a period of time, paid monthly or quarterly by a private arrangement. You will be in a position to know what the business can afford to repay the debt. If you trust the person to manage under your ownership whilst repaying the debt may be an option.
Bear in mind that all businesses are in for tough times for the foreseeable future
 
I say it would be extremely hard to get finance in present climate for this. i would not rule out selling over 3 years as its your decision. is the business worth 15ok? what are you going to do after leaving. could you leave take 40 k and do deal on pension contributions/salary over a few years for yourself.

could you get her to fully manage it and sell her your shares over 3 to 4 years.

how strong is company balance sheet regard assets, debtors, cash, bank a/c, creditors, are you owed money. is their guarantee income in future for the company?
 
what line of business are you in as a matter of interest? e.g. cafe, printing etc. (this would apply if the purchaser were to go looking for finance. i know she has been turned down but some banks may be more open to different types of business)
 
Hi hizzy

Why not sell her 20% of the business now and she would have the option to buy the rest over time?

if she does not come up with the money, you could repossess the business.

This is messy, but if you really want to accommodate her, it would be one way around it.

Brendan
 
Hi All

Its a launderette/dry cleaners, it has a good name, having looked at the figures she could earn around 50,000 euro per year, this is taking away all outgoings, as for the banks, what two of them have said is that because she as a person has nothing, they won't give her the money. My only concern is that I will more or less be the bank if I do it over 3 years.

I'm sitting down with my financial guy this morning, and wanted to bounce some ideas off him.

Hizzy

Ps thanks for all the advice so far
 
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