Planning for getting a large loan

[Das]

Hey guy's I haven't posted in a long time, but I still lurk here about once a week. Anyways thats besides the point so I'll get on with it.

I've recently come across a deal that I think I'd be a fool to pass up. I know a guy who owns a machine shop, and he wants to retire. The big draw for it is that it's certified by the govt. for contract work. The price he's told me that he's willing to part with it is a little over a million. That includes the machines, tools, building, and certification lock, stock, and barrel.

He's showed me his books, and I've worked freelance for him in the past, so I have verified that everything is on the up and up as far as its value is concerned. He could probably get 3 times as much for it and it would still be a steal.

The problem I have is that I don't think I have enough credit to just get a loan from a bank, so what I'm asking is doe's anyone have any experience in securing large loans? What's the best way to go about it?

Any input would be most welcome.

 

[CGE333]

1st of all just because you looked at the books and "verified" it, you need to have an accountant who is very experienced look at it. You also need a biz broker or someone with knowledge of that type of industry give you an appraisal of the business. That is before you start looking for a loan, as any bank or investor is going to require that.

If you don't think you can get an SBA loan on it, because of credit, size of transaction, etc... you will need an investor that is willing to pony up money or collateral to secure a loan.

The easiest thing to do would be to get the person who owns the business now to accept payments over 5+ years, perhaps with a balloon payment at the end.

 

[Bible_Belt]

The building and major assets may be borrowed against and provide some collateral. Find out what the real estate appraises for and the value of any major equipment.