You can use your house as collateral to buy a business, also known as a “homeowner business loan”. But if your business defaults on the loan the bank can repossess your home to recover the outstanding balance. If the bank seized your house, this would result in you and your family becoming homeless.
Buying a business that isn’t for sale is known as buying “off-market” and is the best way to buy a business. It’s estimated that up to 80% of businesses sell without being advertise, which means if you just look for businesses online or via business brokers, you will miss out on these opportunities.
You can buy a business without a solicitor if the seller is happy to sell without a solicitor too, but you need to be confident and competent at writing a agreements, which in this case will be a “Sale and Purchase Agreement”. If the deal includes a property, you should use a solicitor for this.
To find businesses for Sale without using a broker or searching online, you should use a direct approach and contact business owners by writing letters to them. By contacting entrepreneurs directly by letter works because many business owners fear putting their business for sale with a broker.
If you are broke and want to buy a business, you should consider unsing seller financing. Seller financing is where you use the business you’re buying to fund the purchase, so that you pay the seller over and agreed timeframe, which is about being creative and working smart.
A seller note, also known as seller paper or seller debt, is when a person who is selling their business agrees to receive part (or all) of the sale proceeds over time instead of all at once. The seller gets paid in a series of debt payments after the sale closes.