Funding

June 17, 2021

by a searcher in South San Jose, San Jose, CA, USA

What is the best way to find funding with little to no money down without using equity from a residential home to buy a business?
I do have money to put down, but it is $10k.
Any suggestions will help.

TIA

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Reply by a searcher
from Emory University in Katy, TX, USA

I'm not a banker, so first recommendation is to speak with a pro for this, but hopefully this gives you some direction for further research. You should start with SBA 7A as Mark said. It has low down payment requirements - on the order of 10%. You can also use a seller note to count towards down payment, if the note has the same life as the SBA loan. Beyond that you can think creatively about compensating the seller in ways outside of the overall purchase price, and thus the down payment requirement. For example, SBA 7A allows for up to 1 year of seller hired on as a consultant for the business. Lastly, you can raise cash from family and friends, as long as each individual investor has less than 20% ownership they won't be required to give personal guarantee for SBA.

Reply by a searcher
from The Hong Kong University of Science and Technology in Sydney NSW, Australia

Focus on developing a plan to grow, and looking for an attractive deal first. For the first deal, be prepared to take equity out of your residential home (even though you don't have to). This shows your confidence and determination in the deal and may help you to convince investors. If it is really a good deal, you probably want a bigger share of equity anyway.

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