V. Qualified Buyers Are Your Targets
We have already discussed financing and now it is important to understand who qualifies for financing. One of the biggest misconceptions is that small business loans are based on credit. While credit runs a distant third there are two more important factors used to determined a qualified buyer.
The very first credential is relevant experience. The buyer must have experience in your industry or the ability to bring on a partner with experience. And a resume is one of the first things That a lender asks for regarding financing. Ask yourself would you provide financing to a buyer with no experience in running your type of business? We didn't think so.
The second credential is liquid capital. For a buyer to qualify they must have at least 20% liquid capital (money readily available) of the asking price. This is also the second credential of lenders when determining financing. If they do not have the requisite 20% then they will need to bring on a partner who has it.
Finally credit gets involved. Most lenders will look at a prospect meeting the first two requirements who has a fair credit score (640) and up. So as you can see this is last on the list rather than first.
Finding people interested in buying a business is easy but are they motivated and qualified?
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