Many people dream of becoming their own boss of an internet based business. It’s an attractive proposition since you can make your own hours, set your own rules, operate from anywhere in the world and keep all the profits from your online business. However it’s not an easy road to get there and, unfortunately, only a very small percentage of individuals actually get to make that dream a reality – and succeed. The main reason for this failure is due to the statistics collected concerning startups. Studies have shown that 9 out of 10 people who tried the transition from being an employee to becoming an employer or their own boss did not find success. For this reason, many choose the path of buying an online business rather than start one from the ground up. Taking over the operations of an already existing and successful online business lessens the risks and increases the chances of not becoming part of that statistic.
Buying an existing online business is a viable option for those who already have industry experience, significant managerial experience, or those people who already have a set plan to enhance an already existing business. Though it is a viable option, acquiring an existing, yet successful businesses does not come cheap. You are purchasing a business that already has cash flow and in some cases overhead. Sometimes, even using all the available financial resources as well as negotiations about seller financing may be not enough. Where do you turn when you are out of financial options? One consideration to look at is an SBA loan. However, how can an SBA loan help you out in acquiring an existing online business? Read further and find out.
What is an SBA loan?
Also known as Small Business Administration, the SBA is a government agency that is formed to work and support small and growing businesses all over the country. They offer a number of loan programs geared towards people who want to start, buy or own a business.
The SBA offers six types of loans. The most common type is the SBA 7(a) loan. This loan can be used for many purposes, including working capital, debt consolidation, and business acquisition. In order to be eligible for this type of loan, its proceeds must be for a legitimate purpose within an approved business type, and its intended business should fall under the category of, and be regarded as, a small business.
Why use an SBA loan?
First, the SBA takes on some of the loan risk, and this is what most people are looking for. Assuming everything meets all the guidelines, the SBA guarantees loans by the lending institutions. This guarantee greatly reduces the lender’s exposure to potentially large losses. This will, in turn, allow lenders to offer financing in riskier deals such as new business owners or to borrowers with low collateral. In summary, due to this SBA guarantee, your loan application approval chances will be greater. Therefore, if you are looking to acquire an online business, you might want to look further into applying for an SBA loan.
Apart from this, SBA loans have some of the most competitive re-payment terms and interest rates. Currently, prevailing interest rates range from 6.75% – 8.75%. Qualified and certified borrowers can expect approval within a few weeks, and their loan can be taken out within 45-90 days.
If you are looking to buy an online business and need financial assistance, an SBA loan is a great option. Due to their competitive interest rates and re-payment terms, an SBA loan is a viable option for individuals who want to acquire an online business. In addition, acting as guarantor, loan approvals will be more streamlined and faster.