Our conventional wisdom is that a buyer for a business has to have at least 20% of the price in cash to put down, plus cover hefty closing costs.

In recent press reports we are all lead to believe that there is a “credit crunch” making it hard to get any credit for anything.

In spite of this, we recently (November 2007) completed a deal where the buyer got over $30,000 at closing from the bank. He was able to put that toward the cost of inventory, which cost a lot less. In other words, the buyer came out with money left over from the financing! A true “no down payment” deal!

It takes two things (at least) to do that. A lot of home equity and a business plan for the purchase that shows enough cash flow to cover the debt and still leave enough to live on. It also helps that the buyers spouse has a job with a good income.

But the point still is made very strongly that if you have a decent deal, a good credit rating, and the desire to buy a business, there is money available! Our local banks in New Hampshire didn’t pig out on the wave of sub prime and other risky mortgages. Most of the senior bank leadership lived through the crashes of the early 1990’s and learned from the experience. Call us for the name of the friendly banker for this deal. If you are looking in his part of the state, he is a great resource.

We still ask customers what they have for resources to put down, and we need to know your financial situation before we disclose lots of information about a business. But it is not always necessary to have lots of cash if you have other resources.

Even if you don’t have home equity you can now buy a business with the funds in a 401K if you do it properly.

Interest rates are still low by historical standards, and it is a great time to buy a business!