When Someone Buys Your Business With An SBA Loan

Keyword for this post: SBA loans

So you are ready to sell. And your buyer will be asking for an SBA loan to help in the purchase. What will the buyer need from you?

Financial. Yes. As far back as you've got them.

More importantly, the buyer will need to establish a value for your business, one that will support an SBA loan. Be sure the following things are in order:

Customer List: For businesses with a great deal of repeat business from its clients, the database of clients certainly has value.

Proprietary Processes: Businesses whose success is partly due to proprietary processes, technology, or methods, have value in those processes or technologies. These processes should be documented in such a way as to be transferable and repeatable by a new owner.

Location and Facilities of the business: I know one retailer who sold three different businesses solely on the basis that he had negotiated great lease terms. If yours are great, they do indeed provide value to your company.

Patents and Copyrights: Make sure all patents and copyrights are in the name of the business, not your name. They add real value to business. Doing this before you are asked to do it shows your cooperative nature.

Goodwill: Make sure your employees are trained in all the skills they need to keep the business running without a hitch. Keep media contacts in place. Keep supplier contacts in place. Be ready to sign a non-compete agreement. If you leave the business, and the business leaves with you, your buyer will go under in no time.

Reputation: If your company has been selected to sell to high profile companies or agencies, it is assumed that you acquired this business through having a solid reputation. More than that, the more solid your clients are, the more solid you are as a company. Flaky clients make a flaky business.

There is a lot more the appraiser will ask for -- your lease, your various agreements, etc. All that is pretty standard. Just make sure he takes into consideration the items listed above. It will make an SBA loan go through much easier.