Shownotes
Down Payment - Slicing Eligible Sources
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Follow and Subscribe on YouTube: https://www.youtube.com/@BizBuyersAlly
Deb’s Website: https://www.debcurtis.com/
Richard’s Website: https://richardparker.com/
Transcripts
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yes reality get ready to dive into the world of buying and selling businesses without the fluff and fancy jargon we
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cut through the BS to bring you raw unfiltered insights from industry experts seasoned entrepreneurs and no
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holds bar discussions they get straight to the point whether you're a seasoned
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business buying Pro or a curious aspiring entrepreneur this is where the
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real talk happens buckle up for headbands and Hangers because in business there's no room for
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sugarcoating let's get down to the Brass
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TXS hey there Richard what's going hello hello hello how are
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you it's always a great day on Thursday because I get to meet with my best
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friend Richard isn't that great I look forward to it all day it's nice I actually had uh breakfast today with
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someone um I her and I we met at summer camp when I was
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seven and and we've been friends all these years we don't see each other as frequently but she's down in Florida for
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for a week with her husband and we had um breakfast this morning and we're just when you're talking about old friends
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yeah imagine all these years 55 going to be 56 years that we've been friends that
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is incredible wild that wild yeah crazy crazy I love that well that'll be us 50
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years from now too you you don't if we're doing this show in 50 years from
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now we're in TR we're in deep trouble I can't even imagine what I'm gonna look like but but anyways I
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appreciate the compliment and it's terrific to see you you too so today's topic is all about cash well not
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necessarily the green stuff finding a way to create the cash the green stuff
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yes so um you know I think of um business brokers Richard when um they're
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meeting with business buyers which is typically the normal route not necessarily the best route to start your
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journey when you want to be buying a business and you're searching is starting with the business broker
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because the first thing they want to see is your bank statements and how much cash you have before uh a conversation
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is even had and I get that but do they
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really know where to seek and find other eligible sources of of additional cash
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because they could be missing the boat the business brokers on buyers that have
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access to other eligible sources of that cash and that's what we're going to get into today wonderful and you know it's
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it's not really incumbent upon the broker all of this so much of this process like really 90% of this process
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is incumbent on the buyer and that becomes a um a misunderstanding by a lot of people who are getting into to this
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for the first time thinking that all these stakeholders Brokers accountants
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attorneys are going to take them to the promised land and the it's incumbent upon the buyer to acquire the knowledge
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they need to put together the right team to go through the process effectively understanding the role of business
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brokers and business brokers and I don't blame them they're you know they want to make sure that you have the money and they want to make sure you can get to the finish line and so it's not their
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skill set or E some have it but it's not generally their area of expertise to uncover the the nuggets and find
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potential assets or or you know other uh Capital that they can leverage like you do like the your shining star that you
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are the the queen of the gold nuggets so so tell me for example so they have these buyers they have a an average
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personal financial statement assuming that they want to go down the road of an SBA um
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loan what is what do the lenders and we know from all their shows together that there's a big change between lenders or
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big difference between lenders what they require but on the whole what what do they want to see from a buyer as far as
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the ability to um fund um you know the equity portion that they're responsible
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for into it into the deal yeah uh that goes down to being fully transparent
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with that personal financial statement not leaving anything out um sometimes I
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don't know why but some business buyers don't want to disclose everything on their personal financial statement
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whether they're just lazy and they don't feel like filling it out or maybe they just don't want people to know how much
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they have you know why they do it Deb because I've had this come I I've had this come up over and over again for 20
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years they believe that if they demonstrate too much the seller is going
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to think or or or negotiate terms in the sale of the business just because they
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because they can afford it and and I always tell them it's actually the complete opposite by you demonstrating
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you have the capital that puts you much further towards the front of the line to demonstrate that you can execute this
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transaction this has nothing to do with the terms it doesn't matter if you have a business that they want to sell for a
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million dollars and it's the value is 500,000 just because you have a lot of money doesn't mean that you're going to
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pay a million dollars for the business the seller may think you're going to but you're doing the valuation not them
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disclosing the more robust your financial statement that you could present to lenders Brokers sellers the
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better off you are the thinking is completely flawed when they do it the opposite way yeah and and I would like
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to open up your thoughts for business brokers to open up their thoughts in
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regards to what more do they have besides just cash right right because
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assets can be turned into cash and and we're going to walk through that I believe you're right that that business
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buyers must present everything that they have in that financial statement but business brokers also are cutting
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themselves short on selling businesses because they're trying to pre-qualify
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buyers on cash alone where right an SBA business acquisition Loan Consultant
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like myself or my peers that I work with some are solutions focused and will dig
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in deeper asking questions on how we can generate these additional eligible
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sources that's not a business broker's job to do that so absolutely not start the process buyers with the people that
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know what is eligible and sometimes that's not one direct SBA lender you may
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be dealing with someone that has been on the job for two years and doesn't really know what all the eligible sources are
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or how to get creative creating that Equity injection to get a
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loan approval to buy the business so and where and where do you see some of the biggest um gaps where there may be more
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assets or for example maybe we take a step back the lenders want to see Equity
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whether it be you know Equity let's say equity in their home or Equity you know in uh uh uh Holdings tax uh um stock
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Holdings Etc but what are some of the things obviously cash is King then going
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down the the list cash then um stock portfolio as far then uh home equity how
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what what about um retirement funds I'm glad you brought that up and well you
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can count on me for something every once in a while during show yeah not much but here I am every once in a while that is
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a a vehicle that can be used to create taxfree cash by pulling it out of
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your 401k if you're leaving that employer or
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many of us season corporate employees over the years I've been at a few different employers where I built up
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401ks and we may have transferred them to to like you know um Fidelity
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Investments and piled all of our 401ks into one area well that builds up over
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time uh and there is a program called robs R OBS is the acronym rollover
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business startup or robes some people call robes some people call them robs depends what state you're from so we're
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gonna open the robe okay let's go robes robs yes I'm actually going to um uh ask
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you as well we're gonna invite a guest her name is Susie Granger from Guiden Financial she's an expert and she's been
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good yeah she's been delivering uh uh this robes program tax-free
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rollovers where buyers can use those funds tax-free as down payment P to
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purchase finance a business I'm not the expert there's pros and cons to everything and she she'll explain that
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but I have funded deals Richard many times where people will roll over their
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401K as the down payment to purchase the business it's pretty cool yeah it is
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cool and and you know I've had it Guiden been around for many years they've um
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like they've done a really good job as far as bringing awareness to people one thing that I see from um lower buyers
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just or lower Market buyers is or push back or concern related to risky you
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know I've saved up all this money my 401k and why am I going to use it now or there's there's some uh push back and
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and and um justifiably so from a spouse partner says hey we're you know we got
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to think twice before we leverage you know our retirement plan on the other hand people need to understand sometimes
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these type of savings are exactly for these types of opportunities and in
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entrepreneur preneurship you know there's always going to be an element of risk whether that's leaving a job
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whether that's you know taking your savings putting it down on the business whether it's you know providing or
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collateralizing a loan with home equity or rolling over your 401 uh 401k plan
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but they certainly are you know viable options and part of the reasons for why you've been doing all of this if you
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know if entrepreneurship is is your dream these are the exact things that you have to look at and has to be with a
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lens of okay at least I'm open-minded to consider all of these things yeah yeah I
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I would like to uh toss in any listeners out there that are thinking of doing a
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robes rollover um check with a acquisition Loan Consultant or your
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direct SBA lender because as we always say Richard every bank has their different in-house credit policies well
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guess what there are banks out there that only want to deal with
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certain robes roll over companies like a guidance or a beneficial there are tons
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of other ones out there and we have to be careful because some charge more than
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others there's monthly service fees right there you know set up fees right and I think it's it's it's benr right is
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that the one you're meaning yeah they and I'm not sure if they're a Mal yeah but they and they've also been around
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for a long time so I'm assuming that the big ones it would seem to me that if you're going to do that you want to get
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with the players that have been doing this the longest they have the most you know the most comprehensive team behind
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them there's some question it has to be bought through a C Corp not an escorp I'm not sure if that's still the case but having you know the resources as
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opposed to someone who's just brokering these type of deals dealing with a you know a comprehensive reputable company
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and and they I recall they were always very positive with encouraging the buyer
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accountant attorney Etc to financial planner to look at it to make sure that it you know their that part of their
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team is very comfortable with the the transaction so they always struck me as you know a very legitimate group yes
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indeed I and I do know there are annual um IRS requirements that must be
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completed every year with the robes program I don't want to get into the details we'll save that for our special
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guest one day um but listeners please understand yes you got to have cash but
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there is a source there that Richard and I are talking about already you could combine your Cash Plus maybe a robes
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rollover of your 401k um maybe you sprinkle in a seller note uh with a twoyear standby slice and
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dice at three ways to get to your 10% you got a deal see how that works yeah
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now what about um gifts family friends giving you money the the one thing I've never had the
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luxury of enjoying in my life okay but I should say you haven't had the luxury I
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had the honor of doing it the other way to my kids but but you know if you have family members friends Etc who may want
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to give lend you the money or there's two parts lend you the money or gift you the money gift would be nice but if
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they're going to lend you the money for the down payment is that something that's carved out you're okay with doing
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that but that's carved out because all these secondary loans whether it be a seller note or gift or a loan from you
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know friends and family those take a secondary position of course over the over the bank's loan but with that in
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case with that in place isn't there some change recently where you can it's it's
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not it's not standby it's secondary position so in other words you can keep you can pay those notes as long as
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you're satisfying the first note because it used to be in standby where you couldn't even pay those secondary notes
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until the SBA note was paid off now I think there's a bit of a change to that right well there's a big change with the
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new SBA sop uh that went into effect in Fall of last year
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the SBA is telling the banks and the non-bank lenders you guys decide what
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you want to do and what you feel comfortable for Equity injection I the S
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the sbop says in there you could do a 100%
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seller note for the whole Equity injection but I'm gonna tell you right now Bank lenders aren't GNA fly on that
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one I think I knew one lender that did um uh 100% financing for a buyer because
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the Sweat Equity the buyer had been employed for like 15 years so they looked at Sweat Equity as the cash down
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payment so what I'm trying to say here Richard is that anything that is
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eligible in the sba's eyes for Equity injection can be sliced and diced
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however the bank feels comfortable to do it okay so anything can happen yes so
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what so you know the situations where you know it's wonderful that all they they set up this sop and they're um
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there's a there's a lot of wiggle room there's this 100% wiggle room but the reality is no one does it so who gives a
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excuse me like if no one does it who cares it's just it's just like smoking Mirrors by you know the um to
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present something as an opportunity Banks don't do it so that's that's that's not going to happen so how does someone go and I'm not teeing this up as
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a question for your service but or or maybe I am is you know going through a
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buyer is faced there's there's hundreds of SBA lenders and so when they deal with
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someone like yourself how quickly are you able to look at scenarios where because some buyers come to you they
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simply don't have any their financial statements not going to pass any criteria I mean their only hope is
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seller financing the only hope and that happens in a lot of cases but how are you able to look at that and and say
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realistically this is leaving the business side real istically here's I I think we've got the probability of X for
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you to get an SBA loan without you know putting your butt on the line you know or putting yourself in a really bad position is that something when someone
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comes to you with a personal financial statement may not have terrific credit they have a few bucks or whatever the case may be like how often do those
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people pass in other words your first gatekeeper area where you say I think we
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could do this or we can't I have a business buyer profile
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document that I ask prospects that want to learn if they're pre-qualified to fill out for me to open up the
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conversation and any bank or non-bank lender that's going to deliver 90% of
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the capital for the loan project they're going to want skin in the game from the business buyer that's it is what it is
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so when I look at that buyer profile Richard I need to see that they do have some cash and right and that they also
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have enough cash to cover post closing liquidity meaning you have enough in
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your savings account in case there is an emergency uh personally on the personal
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side there's six months of liquidity in your personal savings account we don't want the buyer purchase financing a
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business to dry up every dollar out of their personal savings we're not putting them in a good in a good condition in a
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good in a good position right that's right so um when I see there's not
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enough income there and I don't see any home equity they're renters and and it's
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not to say I can't approve somebody that doesn't own a home we can approve people that are renters they may have a ton of
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cash in their account they may have stocks and bonds they may have retirement assets right they may have
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other real estate owned so yeah we we can help out people that maybe don't own a home uh there's just so much that I
17:56
look at but I also also got to be careful because somebody may have like only 20 grand in
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their in their savings account and they want to buy a $2 million business well what
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if Grandma or grandpa or the parents have money and they're willing to be an
18:17
investor into the deal right right that can work so we we have to always have
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eyes wide open to ask open-ended questions of business buyers and Mentor
18:32
them as to what all the other sources are that truly can be eligible based on
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the different banks credit criteria out there right right and so they need to
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right so I mean so the answer with some of these things because there's always a
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tremendous amount of people within the world of looking to acquire businesses that look at this the same way when they
18:58
drive by the car dealership you know in in their area to see you know you'll buy it with no no credit no cash down no
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money drive it you know pay and drive today and it doesn't work in buying businesses so the re the realistic
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portion is you've got to have um uh capital for your down payment there's
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just tremendous number of avenues where that can come from right and so those
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are things that you explore on the other side of things are for the buyers who who don't have that but they have the
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you know men's desire to acquire a business and we'll cover that in another show as to how they potentially go about
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that but for them the buyers to get to be completely transparent and not you know and so they
19:39
know if this is a possibility to get the financing and another thing that I've seen and and would um caution uh
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prospective business buyers going down you know looking for third party financing whatever that may be so in other words they're not paying cash for
19:52
the business because you see this all time to your last point oh you know my uncle my grandmother or I have a group
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of investors and they're you know they're interested and they told me yeah they they they'll back me and that's all fine and good and I've seen it countless
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times where uh an individual goes through the whole process they find business they start negotiating with the
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seller they agree to some deal terms and then they go to meet their investor and
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they're not writing the check yeah and so and so when these when you have a scenario where someone else is going to
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fund the business if it's not an immediate family member who's you know of the ilk of hey I trust you and you
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know I'll give when you find it I'll give you the money that's very different than one or a group of investors who say
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yeah we will back you so what you want to do in those scenarios is as soon as you find any business of Interest
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doesn't even have to be the one that you're potentially going to buy and you may be in early stages you've got to
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meet with your investors and you got to walk through the business and even before that when they get represent that
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they're going to do something with you or Finance you you got to say them well here's the type of business that I'm looking for lay out for me the criteria
20:58
that you want to see because when the time comes you got to make sure they're going to write the check darn right I'm
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glad you brought that up because I have experien in my younger days trust me
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your younger days are right now yeah but I you know and and I always say those
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who have walked through the fire are the qualified because they've been burned listen I've been burned and I've learned
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I've seen business buyers tell me and I trusted them oh
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yeah my dad is going to give me some funds and then you know we want a letter that
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says there's no payback because that's an SBA requirement and I trust the buyer
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that that's true and accurate and then when push came to shove after we got rolling dad never said that right he
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just had a dream dad would say yes but Dad said no so I know going forward to
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vet those sources right out of the gates right out of the gates absolutely and
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and the buyer needs to do that too they should be vetting their sources you don't want to go down and spend all kinds of time looking at businesses and
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find out they're not going to be available to write the check because at the beginning everybody you know they could represent that but till they have
22:12
to take put their hand in their pocket they could change their mind and they're entitled to do so so qualify that at the
22:18
beginning when you have a group of investors that have any criteria criteria attached to it versus you know
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your your your your parents will say they'll they'll give you the money that's different but meet with them early understand their criteria and keep
22:32
them keep them um up to dat during the process as you're looking at a particular business keep them informed
22:37
keep them up to date because you don't want to go through all of this and find out then you have no dollar sources whatso whatsoever I mean that's that's
22:44
just an Monumental waste of time and I see it over and over again happens all the time I think we have some questions
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by the way I don't have my glasses on so I can't see anything but I'll put these goggles on for a second there we go oh
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there Deb look at you okay yeah I got the goggles on her good hello hello hello she says Okay um are there
23:04
resources or guidance available to help businesses determine their financial Readiness for the down payment I'm
23:11
assuming she means the um for for business perspective business buyers so yeah that would be me that would be me I
23:19
would be the one that me Deb yeah I would help aspiring business buyers
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understand if they qualify based on their personal financial statement today
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and furthermore when you're transparent and you put everything on that statement
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I will help you discover if there's other avenues for cash down payment um I
23:44
did a post today on LinkedIn W with a short video about how a business buyer
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went through a listing broker to get SBA financing to purchase finance a very
23:57
well qualified staffing agency it was Cash flowing like a cow
24:03
she exhausted she would have exhausted all of her personal cash liquidity
24:09
leaving nothing behind after the loan closed so the three lenders that the listing broker referred her to all said
24:18
no three times I was I wasn't one of the lenders in that business broker Circle
24:25
because business brokers and L M SBA lenders they work together and they earn incentives because they refer business
24:31
to one another which is fair and equal SBA says that's that's fine but the door
24:37
was shut and that broker didn't refer that buyer to me the buyer happened to
24:43
find me on her own I dug in deeper she had a couple of vehicles on her personal
24:49
financial statement and I knew she was single she was unmarried and I asked her
24:55
smart yeah but I know I knew what the what the problem was she didn't have
25:00
enough post closing cash liquidity on her personal financial statement right so when I saw um that she lived in
25:07
Minnesota and the business she was acquiring was in Florida smart again she
25:13
she's getting smarter by the minute get the hell out of that joint it's much warmer here oh for sure that's that was
25:18
a big reason why she wanted to buy the business was the weather but I'm like what are you g to do with a 4x4 a Jeep
25:24
four-wheel drive uh that she owns in Minnesota with a Toyota Camry I go which one do you drive well I drive the Camry
25:31
well what are you going to do with the Jeep when you buy the businesses in Florida well I'm going to sell the Jeep when I'm in Florida I'm like no you're
25:37
not you're gonna sell the Jeep now while you're in Minneapolis and there's six feet of snow and you're gonna get top
25:43
dollar because everybody wants a four-wheel drive in Minnesota and sure enough she listened to what I said she
25:50
took it to a CarMax and they gave her a bid of $32,000 on a used four four-wheel drive
25:58
I contacted the bank underwriter I said listen we got all the cash for the down payment now we got
26:05
$32,000 liquid cash she's going to put in her personal savings are you comfortable with that for a post closing
26:12
liquidity requirement yes yay Deb look at you boom yeah Bo now that's the stuff
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and that broker just about lost a sale of a quality business yeah an unhappy
26:27
buyer that worked with three SBA lenders that just didn't dig enough and dig deep
26:33
and ask questions of the seller like what are you doing with two vehicles but who does that Richard their job they're
26:40
just want it's you know it's the again transtion set it's transactional skill set and and and my opinion is you know
26:48
there's plenty that business brokers do wrong there's lots that do they do right it's this is incumbent upon the buyer
26:53
get with the right resources get with the right consultants and advisory yes it's it's it's upsetting because they
27:00
should have directed them yes you say it's easy to say you know they should have asked questions or you know expand
27:06
their network of potential lenders beyond the scope of where they may just be getting compensated that's just wrong
27:11
that's just bad advice but the buyers throughout this whole process and you know I'm dealing this with for decades
27:17
is buyers need to gain acquire the knowledge they need for all stages of the process this this happens at lending
27:24
it happens in negotiation it happens in valuation it happens in the business section choosing the right business it's all the way around so it's just another
27:31
example of you know hooking yourself with with hooking yourself up with the right people and she's obviously
27:36
brilliant for all the reasons that we cited she's moving to Florida or as they say in Massachusetts she's wicked smat
27:43
wicked SM yeah and and now she's and and and how long I'm assuming that in
27:50
Minnesota selling a 4 by4 in the throws of winter is a pretty quick sale it was
27:55
like within a couple of days right and here's the funny thing she she probably would have get half in Florida
28:02
she probably could have sold it for more if she retailed it herself but we were we were past the the purchase agreement
28:08
deadline so we had a bust dupa right bust a bust a butt yeah to
28:14
get the deal done you got it done yay Deb another one I'm proud of her she's two years in I gotta get a bell for our
28:21
show I'm gonna do that I'm gonna get a bill bring the bill um but I um I checked up on her and she's doing well
28:28
she's two years into the ownership transition it was absentee owned when she bought the business it's still
28:34
absentee owned wow with her today she just oversees it there's key employees guess what she's going to do next buy
28:42
truck no she's gonna buy buy another Staffing Company exactly yeah it's an
28:47
entrepreneur all right I love those stories I think we have some questions here all right let's let's what we
28:54
got let's just see here uh under are there any circumstances are there any
29:01
circumstances circumstances sorry it's my first day with my new tongue are there any circumstances under which the
29:08
down payment requirement may be
29:14
waved I'm going to answer that that it's based on Bank
29:20
Comfort levels credit decision Comfort levels I go back to the 100% financing
29:27
where there was no down payment from the buyer because she was a 15-year employee
29:33
and that and they looked at it as if that was sweat that's Sweat Equity yeah and that's also going to overcome the
29:40
you know the requirement as far as relevant industry knowledge Etc and you know I think we should probably make a
29:46
note to have one show related to the topic of these scenarios where people don't have money but they've been
29:52
working for somebody and they have an opportunity to potentially acquire the business because I've done tons of those de deals and help buyers do that or in
29:59
scenarios where they may be outside the company they don't work there but they have relevant industry experience they
30:06
don't have the money and there's a way like not to get off topic where they can go in acquire a smaller percentage of
30:11
the business bring some value because of their skill set to retiring or soon to be retiring owner and then leverage what
30:18
they bring to the table take a little bit less salary the beginning and leverage a percentage of profits into a
30:24
purchase price like I've done that tons of times and it's a really good way to um you know to to get into business
30:30
ownership where you normally wouldn't have the resources to do that but the individuals working at the company
30:36
they're in a real good position with a lot of lenders and a lot of even other
30:41
investors potentially because they know the business I mean one of the hardest pieces is to you know to be able to hit
30:46
the ground running with with a new business so that you know that offers a lot of comfort to to lenders the sellers
30:52
you know traditional lenders and when they looked at their Sweat Equity this individual had a like a meaningful
30:58
position at the company right they were there they were definitely of course yeah that's great
31:06
right on Richard you're right on a right path there and another circumstance where the down payment requirement may
31:13
be waved buying out your competition right 100% financing uh done
31:21
several deal deals like that over the years yeah if you're a landscaping company and your nakes coat shows you're
31:29
a landscaper well that competition you that you know and you you probably help
31:35
each other I I got two vets in my hometown one overflows the other picks up and vice versa they just kind of you
31:42
know just goes to show we need a third vet in town but these two are monopolizing if one bought out the
31:48
other they're the same nakes code meaning the same industry on their business tax return you can get that
31:55
deal done buying out your competitor at 100% financing can you get you could you get that type of financing buying out a
32:03
an ancillary business so example landscape company buying snow removal not in Florida but in Min Minneapolis
32:09
where there's a very clear connection of you know same same or similar customers
32:14
you know it it eliminates seasonality issues like it's a very wellth thought out strategic
32:20
acquisition it's going to have to be the same nakes code period that's an sop
32:25
requirement now the underwriter may be a little bit more
32:31
lenient on very minimal cash down so maybe instead
32:37
of 100% financing he may say I would like to see three to five percent down
32:42
and kind of change things up what a deal it is a deal it is a deal Advantage if
32:48
you have a company I mean you're G to buy a business for you know uh you know a million dooll business I mean if you
32:54
don't have 50 Grand you shouldn't probably be buying your compet ition right because you got you're going to have headaches with that too to the
32:59
integration but it's you know I I had a podcast recently that I was um that I
33:05
was on and we were talking about that one of the greatest ways to grow your business is through acquisition it's a
33:11
hell of a lot easier than organic growth in almost every case and so you know and small businesses real small businesses
33:17
doing a few hundred thousand dollars or whatever they don't think that way but there's there's chances are if you have
33:23
a small business you have a lot of competition that have other similar or same small businesses a great way to
33:28
grow your business and one of the big advantages by the way you buy out your competition you don't need to take any
33:34
money out of the business initially as long as your business is relatively stable you can use all of their cash
33:39
flow to pay off the loan as fast as possible so instead of becoming a bit of a pig and looking at their profit you
33:45
take all their profit use it to pay down the debt or and and to put it into marketing as opposed to putting it into
33:51
your pocket for a period of two to five years and suddenly one plus one equals wow
33:57
exactly in addition to inheriting probably some seasoned employees
34:03
absolutely and um and think about um the expense reduction if you move into one
34:09
location yeah possibly for sure yeah absolutely lot of advantages can I share
34:14
just a couple other quick ideas here for our audience of other sources okay um so
34:21
we talked about um uh family gift gifted funds or Love Money remember of money we
34:27
talk about um you can have investment owners inject some of the
34:34
cash that that can be Bank by Bank Comfort level we may have a majority
34:41
buyer who's the owner operator and perhaps there's an investment buyer that wants to put the cash
34:49
down we won't get into it now but they're going to look at why and who and
34:54
how do we know this investment are there any MSA agreements that are that the SBA won't approve of you know Management
35:01
Service agreements of some sort um we got to be careful there but there there are options there uh we talk about we
35:09
talked about debt you know borrowing debt home equity if you have home equity in your real estate owned that can be
35:16
used as down payment and the old sop said that there had to be secondary
35:23
household income making the home equity payment that has gone away per the SOP
35:29
but be careful ladies and gentlemen most banks still want that secondary household income so it makes it
35:35
confusing what you think is going to be a great deal it might be different depending upon the bank that you're
35:41
working with um I like this one um if you are a business owner today and you
35:48
want to buy a second or a third business in a completely different industry mind
35:53
you yes you can as long as the business that you own today is absentee owned and
36:00
has key employees and are running the show profitably because you got to be the owner operator of the new one yes
36:06
okay yeah and if your current business that has been doing well which it better
36:11
be doing well before you buy another business you can use some of the cash
36:16
available from that business to buy the new business but the underwriter will want a note on the business that you're
36:23
pulling the money from that the new business will eventually pay back the old business because we want to keep
36:29
where money is pulled from so a secondary a second position note yeah now are there any restrictions so in
36:35
that example because a great way to to build a portfolio of companies you own company a you put a management in place
36:42
now you go by Company B you get an SBA loan you're the manager there could you do could you rinse and repeat and do
36:47
that with 10 different times as long as the the math works out as long as the math works out and I have clients that
36:55
own three to five businesses in their portfolio it's the coolest thing to
37:00
witness and then they create an umbrella LLC a shell to oversee all of these
37:06
entities that roll up to the to the main core right and uh it it works it works
37:12
great and and usually these buyers these owners are so good at managing people
37:20
that the people that they train up they stay and then what they do is they kind
37:25
of mingle some of the managers overseeing other businesses as needed so
37:31
if one short they move someone over there so it's pretty cool uh to see how yeah it's a great strategy it is so um I
37:39
think we went through most everything um you know other cash options are
37:45
sometimes business owners um buy equipment or there's cash expenses in
37:53
their current business there there are some sop guidelines you can use that
37:59
cash to buy another business so to speak pulling again pulling it out of the current business so um I know it gets a
38:07
little bit yeah but you know what the most important thing there's there's a ton of options a ton of options and and
38:13
and I think a lot of listing Brokers I want them to understand if they're listening today don't be
38:19
so focused on just personal bank statements and be careful your lenders
38:25
perhaps that you're working with as a partner they may not be asking all of the questions like the jeep 4x4 scenario
38:33
that came up with $32,000 right it's not every day it's a lot of money and not every day people
38:39
are thinking outside the box um but people should also sck you know you stick to your swim Lane you you you do
38:46
your best if you're a broker and you don't get it approved or for whatever reason you've got to go to the um you
38:52
know expanded to to the to find believable parties who are more experienced at this and do this every
38:58
day for living and we talked about this in one of our first shows is forget about the fee that you're going to get
39:04
from Al loone I mean who cares a I mean you want you you you want to get the deal to the Finish Line the money you're going to make and the good that
39:10
you're going to potentially do by putting a good person into a good business far outweighs the small commission that you're going to get on
39:16
on you know as an SBA referral source it's a small amount of money I'm not I'm not you know spitting on any amount of
39:22
money but Rel in in in you know relatively speaking it's minimal and that's not your job your job is you
39:30
know to get to buyers to the Finish Line in good deals and so it you know start
39:36
to focus properly as if if the buyer doesn't meet the the criteria the first
39:42
three lenders it's not over then that's when it just begins and that buyers may be a terrific buyer and so put him in
39:50
touch with someone who can make sure they get the deal done as opposed to you thinking a could deal done who cares
39:56
about the commission I mean it's nice I I first of all I don't think it's right altogether but that's you know that's I don't want to be judgmental that's just
40:03
my perception of things but the lesson is get them to in front of the right people throughout this process get them
40:08
to uh Happy Deb Curtis and she'll get you to the promised land there you go my
40:14
theory is let me do the searching and the digging and the sourcing and the
40:19
asking because I know what's eligible and I'll find a way to get Mom and Dad
40:25
or Grandpa to give some love money where you might not be able to do that as a
40:30
business broker what business brokers should be focusing on is getting the next business listing that is qualified
40:38
to put on the market you know that's that's where their bulk of their money is being made I want them to go find
40:44
more quality listings leave the business buyer qualifying up to an expert that's
40:52
been doing it and and we'll find a way to get the deal done well said y so tell
40:58
me this as we're wrapping up our show it's special report time yes our special
41:03
report 10 things the seller won't tell you which we've uh cultivated this is uh
41:08
Decades of knowhow it's a terrific report very helpful for anyone who's thinking about buying a business covers
41:14
a wide array of subjects that will really open buyers eyes of things that they normally will not be necessarily
41:21
given by the seller that are reasonable to be asking for it's not always necessary things that seller hides or
41:27
seller Secrets but there's a lot of those but things that if you don't ask
41:32
for them or know to ask for them or look for them they're not going to um be made
41:37
available to you and they can easily come back and bite you in the what dupa
41:43
in the dupa yeah and they will and they assuredly and I and I ass I assure you
41:48
they will bite you in the dupa so there's a QR code for people to uh get that downloaded we have terrific
41:53
feedback related in every show we get a bunch of those so um I know they find people are finding it very helpful
42:00
awesome and then in closing I would like to thank our show sponsors if you are
42:05
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42:12
maybe you're an SBA lender or maybe I don't know you just want to start doing some live streaming you want
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42:50
that and she's behind the scenes and she's great yep see and her team with brilliant be media if you want to lift
42:55
up your um business digital presence that's who you need to contact take a picture of that QR code and then we have
43:03
Raquel Flores connection center and Y Rocky see there she is our sweetheart
43:10
who supports our show all the time thank you Rocky for what you do for us um I
43:15
believe her show is every other Saturday at 10: am central time she's approaching
43:22
60,000 followers on LinkedIn I mean that's huge nuts it is so if you want to
43:30
get connected and you're looking to network with other professionals join
43:35
her show take a picture of her QR code um LinkedIn is fil filled with over
43:41
nine I think nine billion users you can get lost in that real fast nine billion
43:48
users that's like the whole planet I know is it n billion or 9 million I want to say is a billion or million I don't
43:54
know but anyways it's a b a lot anys a lot of users you have to get into sub
44:01
communities right Richard oh absolutely yeah because if not you're just if not you're dancing on the sidelines right
44:08
you you have to get the key witht LinkedIn we've had these discussions before and I've had let's say mixed
44:13
results or what have you once you get immersed and you get in with like-minded people not that necessar but I say
44:20
like-minded not that everybody thinks the same way but you're you're all looking for the same outcome so other
44:26
ENT if you're looking to buy a business other business buyers um people that are in the industry stakeholders that's
44:31
where you got to dig one or two steps deeper because if not you're just going to accumulate a gazillion followers and
44:37
spend your whole day answering messages to people that they may be nice but that's not the goal that it's it's a networking platform learning and
44:44
networking so yeah you got to dig a Little Deeper got to dig a Little Deeper just like you do on that personal financial statement for slicing and
44:51
dicing your down payment look at you the way you WRA that up you're not you know what we're getting good at our craft
44:56
here you are certainly DJ Deb and rock and roll Rich here to
45:03
serve all right well folks this is the end of our show for this Thursday make
45:09
sure you stay tuned for next Thursday's episode at 2m Eastern any closing
45:14
thoughts for us my friend um all I say is you are a wealth of information in this area this is your
45:21
swim Lane this is your area of expertise um I mean certainly learned a lot this there's a couple of things related to
45:27
seller financing about buying competitors or leveraging to buy second and third businesses putting absentee
45:32
ownership um into place which I wasn't aware of which is phenomenal and so when it comes to anything and everything
45:39
related to SBA lenders you are it I mean you're unbelievable it's just just a
45:44
great wealth and knowledge so I'm sure everybody founds finds this uh incredibly helpful and always it's we're
45:50
always learning and it's uh as always it's uh wonderful to see you you too all right everyone we'll see you next week
45:57
Thursday ciao for now bye [Music]
46:09
bye